Jarkesy Case Strips Enforcers of In-House Court Expertise, Speed

These actions also will likely fall to juries. With the utmost respect to the average US juror, most don’t understand the complexities of federal securities laws.

Take, for example, the case filed against Elon Musk for market manipulation in 2018, when he claimed he had secured the funding to take Tesla private. The SEC filed a complaint in federal court, not with an ALJ, alleging Musk’s statements violated Rule 10b-5 of the Securities Exchange Act covering “employment of manipulative and deceptive devices.”

The parties settled, Musk paid $20 million in fines, and he stepped down as chairman of Tesla. Following the settlement, shareholders filed a class action with the same facts and under the same rule: Rule 10b-5. This time, Musk took it to trial, where a jury found him not liable for the same statements for which he’d just paid a $20 million fine. This illustrates how getting ordinary jurors to understand the complexities of federal securities laws is a more onerous task than the Supreme Court may believe.

Source: Jarkesy Case Strips Enforcers of In-House Court Expertise, Speed