Last Friday, the U.S. Supreme Court heard arguments for Securities and Exchange Commission v. Jarkesy, which challenges the authority of the administrative state. The defendant is George Jarkesy, a conservative radio host who was fined over half-a-million dollars by the SEC for allegedly defrauding investors and appealed this sentence by arguing that the SEC does not have the constitutional authority to do this.
His legal team makes three arguments: (1) The SEC is violating the Seventh Amendment, which guarantees a trial by jury; (2) the SEC doesn’t have the authority to adjudicate these matters since it’s an executive agency, not a federal court; and (3) the SEC judges are unfairly protected from serious political and legal accountability. All these arguments add up to condemn the administrative state as a whole, which Jarkesy’s team claims “is effectively rigged against virtually every defendant that goes before an ALJ [administrative law judge].”
Based on Supreme Court justices’ questioning (specifically those appointed by Trump), Jarkesy may be actually successful in winning his case. According to a report from The New York Times, Justice Kavanaugh took issue with the fact that the SEC is basically acting as the judge, jury, and executioner; Justice Gorsuch pointed out the lack of accountability that results from no jury option; and Justice Coney Barrett was bothered by the blurriness between what counts as public and private law.
As for the liberal justices and the SEC’s legal team, they mainly argued that this is the way things have always gone, citing the precedents set by the Chevron doctrine (which delegates legal authority to executive agencies) and Atlas Roofing Co. v. Occupational Safety and Health Review Comm’n (a 1977 case that reinforces the Chevron doctrine). Sotomayor said changing the existing order would be “dramatic,” and Kagan noted the “chutzpah” of the defendant’s claims.
