The significance of the Jarkesy decision cannot be overstated, and for that reason the SEC on July 1 asked the full Fifth Circuit to reconsider the ruling. Depending on the outcome of the petition, the commission could also seek US Supreme Court review.
If the Jarkesy decision stands, it could lead to fundamental changes in the way the SEC has operated for decades. In the wake of Lucia v. SEC, which held that the commission’s ALJs had been unconstitutionally appointed, the SEC began to bring the bulk of its contested enforcement actions in federal court.
If Jarkesy were to become the law in other circuits, what may have been a temporary move to federal court could become permanent, given the continued success defendants are having in challenging administrative proceedings.
‘Enforcement 40’ for 2020
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