How Will the Jarkesy Decision Affect the SEC? | Kirkland & Ellis LLP

While a ruling against the SEC would be an embarrassment for an agency that has dismissed claims like Jarkesy’s as fringe and legally unsupportable, the sort of outsized effects on the SEC that some have predicted are unlikely to occur. A ruling against the SEC would have some short-term effects, as the SEC rethinks its processes and fends off challenges to its pending and historical administrative actions.

But as discussed further below, even with the loss or narrowing of the administrative enforcement option, the SEC can continue to accomplish its goals through civil enforcement in federal court. The agency’s enforcement program already relies heavily on federal court litigation (and settled actions achieved through the threat of such litigation), and the agency can readily shift most administrative actions to the federal court forum. Perhaps that ostensibly more neutral forum will be less receptive to SEC positions than SEC administrative courts; only time will tell.

However, a balanced analysis will recognize that the enforcement approach of the current SEC leadership does not rely on a single procedural mechanism, and the agency likely will continue to use its enforcement powers aggressively and push for ever high penalties….

Source: How Will the Jarkesy Decision Affect the SEC? | Kirkland & Ellis LLP