In the case decided Wednesday, the judges ruled that a nearly decade-old SEC enforcement action against a small hedge-fund manager was invalid because it violated his right to a jury trial. An SEC judge in 2014 found George Jarkesy liable for fraud, ordering him to pay a $300,000 fine and barring him from the securities industry, according to SEC records.
Congress may in some cases assign legal disputes to agency courts, but the SEC’s fraud cases aren’t so special as to justify funneling them into those forums, the judges wrote.
In addition to violating Mr. Jarkesy’s right to a jury trial, Congress was wrong to have delegated power to the SEC to decide whether to prosecute people in the agency’s in-house or federal district courts, the judges wrote. The panel vacated the judgment against Mr. Jarkesy, who managed about $30 million when the SEC began investigating him.
Source: Judges Deal Latest Blow to SEC’s In-House Courts – WSJ
