Can investors rely upon the SEC?

Can investors rely upon the SEC (Securities and Exchange Commission) to protect them?

The following reported case is worth noting because investors assume that federal administrative agencies such as the SEC are fully authorized to protect the public through the specialized courts they use to bring enforcement actions involving fraud and securities violations.

The following excerpt introduces a short but explanatory article explaining the issues and implications at the following link:…

On May 18, 2022, the [US Court of Appeals for the] Fifth Circuit issued an opinion vacating a Securities and Exchange Commission (“SEC”) Administrative Law Judge’s (“ALJ”) decision that George Jarkesy, Jr. (“Jarkesy”) and his investment adviser Patriot28, L.L.C. (“Patriot28”) committed securities fraud. The Court, in an opinion authored by Judge Jennifer Walker Elrod, held that “(1) the SEC’s in-house adjudication of Petitioners’ case violated their Seventh Amendment right to a jury trial; (2) Congress unconstitutionally delegated legislative power to the SEC by failing to provide an intelligible principle by which the SEC would exercise the delegated power, in violation of Article I’s vesting of “all” legislative power in Congress; and (3) statutory removal restrictions on SEC ALJs violate the Take Care Clause of Article II.” This decision could drastically affect the SEC’s use of in-house administrative judges to bring enforcement actions.…


A jury trial vs. a bureaucratic mandate…


The Captain
likes it


SEC cases involve sophisticated financial crimes which the ordinary citizen “jury of peers” would have a hard time understanding. If the SEC’s specialized court is disbanded because of this new ruling (which I’m sure will be appealed) financial crimes will be much more difficult to prosecute.

The public would be even less protected from fraud than it is now.