October 18th, 2023 2 Minute Read Public Filings by James R. Copland

Amicus Brief: SEC v. Jarkesy

The federal government’s executive branch has increasingly been adjudicating cases against citizens before administrative tribunals, rather than in federal court in which defendants receive constitutional protections. Such was the case for hedge-fund manager George Jarkesy, who was accused by the federal Securities and Exchange Commission (SEC) of charging his investors excessive management fees by improperly inflating the asset values of investments in his fund’s portfolio. Rather than get to defend himself in a jury trial, Mr. Jarkesy had to defend himself in front of an administrative law judge accountable to the agency, with his appeal to the SEC commissioners, who ultimately approved a $300,000 civil fine and a decision to bar him from practicing his trade in the asset-management industry.

The case is now before the Supreme Court. The Court granted review to answer three questions: (1) whether the SEC’s administrative-tribunal process violated Mr. Jarkesy’s Seventh Amendment right to a jury trial; (2) whether Congress had exceeded its constitutional powers by delegating securities-law enforcement in cases like Mr. Jarkesy’s to an administrative tribunal instead of a trial in federal district court; and (3) whether Congress unconstitutionally interfered with presidential authority by making administrative law judges such as the one overseeing Mr. Jarkesy’s case removable only for cause, when those judges work for agencies headed by similarly insulated officials.

The Manhattan Institute has joined an amicus brief in the case, alongside Advancing American Freedom and several other organizations committed to liberty and the rule of law. The brief discusses the separation of powers inherent in the Constitution’s design and argues that Congress cannot, through its Article I powers, usurp the judiciary’s Article III power to adjudicate civil claims by delegating such cases to the executive branch—as is done in the administrative tribunals currently used to adjudicate securities-law cases like Mr. Jarkesy’s.

James R. Copland is a senior fellow at the Manhattan Institute and director of Legal Policy. 

Photo: imaginima/iStock

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