On June 27, 2024, the Supreme Court issued a decision holding that the Securities and Exchange Commission’s (SEC) practice of seeking civil monetary penalties in securities fraud cases filed in its administrative forum violates the Seventh Amendment of the Constitution. SEC v. Jarkesy, No. 22–859 (June 27, 2024). The Supreme Court’s reasoning could have far reaching effects if applied to other federal agencies that utilize administrative law judges to adjudicate fraud-based allegations. In particular, parties facing civil monetary penalties or other forms of punishment arising from allegations of fraud, before other enforcement agencies such as the FDIC, OCC or Federal Reserve, may be able to request a jury trial rather than having their fate determined by in-house, administrative law judges that historically favour the agencies prosecuting them.

Read the full update here.