TheCorporateCounsel.net

Speaking of jury trials – or rather, the lack of them – today is the day that the SCOTUS will hear arguments in SEC v. Jarkesy, which may pare back the SEC’s ability to use “Administrative Law Judges” to enforce securities laws and levy fines. This Bloomberg article notes that Mark Cuban and Elon Musk, who have both won jury trials relating to alleged securities law violations & fraud, have filed an amicus brief to support Jarkesy.

This isn’t the first time the SEC has faced challenges to its ALJ system. But commentators are calling this case “the most direct challenge yet to the legitimacy of the modern federal government,” because the decision will have wide-ranging implications for federal agency enforcement and potentially even rulemaking. Here are predictions on that front from Bloomberg’s Matt Levine:

I don’t think that’s necessarily a likely outcome here. The Supreme Court could rule against Jarkesy, or it could rule for him on the jury-trial stuff without bothering with the nondelegation argument, or it could rule for him on the nondelegation argument in a narrow way, saying that this particular delegation is not allowed without undercutting all of the SEC’s rules. Or it could rule against him on the nondelegation argument (saying that this is not a legislative decision, for instance) while ruling for him on the jury-trial stuff. In some ways that is the easiest outcome: The Supreme Court has several justices who would love to revive the nondelegation doctrine, but this is a somewhat silly case to do it in.

But the Supreme Court does have several justices who would love to revive the nondelegation doctrine in a way that really would undermine most of securities regulation, and while this is a silly case to do it in, it is a case to do it in. You never know! Tomorrow could be a big day for the SEC.

University of Michigan Law Prof Chris Walker and U. Penn’s David Zaring say the remedy here could come in the form of a “right to remove”…

– Liz Dunshee