Elon Musk And Mark Cuban Back Supreme Court Case Against SEC – Tesla CEO Elon Musk and Dallas Mavericks owner Mark Cuban, alongside Phillip Goldstein, Nelson Obus, Manouch Moshayedi, and the Investor Choice Advocates Network (ICAN), have collectively submitted an amicus brief to the Supreme Court. This brief advocates for the rights of defendants challenging the legitimacy of the U.S. Securities and Exchange Commission (SEC) administrative proceedings.
The prominent individuals and groups in the amicus brief underscore the importance of ensuring that the SEC does not selectively determine whether parties are granted their constitutional right to jury trials or are compelled to engage in enforcement proceedings presided over by administrative law judges who lack proper oversight. The Supreme Court has set a date for the SEC v. Jarkesy case, which is November 29.
This legal dispute questions the constitutionality of the SEC’s utilization of in-house judges. The plaintiff, George Jarkesy, contends that the SEC’s internal adjudication, presided over by an administrative law judge appointed by the commission and devoid of a jury, is unconstitutional as it infringes upon his Seventh Amendment entitlement to a trial by jury.
The amicus brief notes that the SEC began handling more cases internally between 2013 and 2014, after suffering “a series of jury trial losses in insider trading cases.” The filing states that amici have an interest in the outcome of this case because they believe: “It is important that the SEC not be permitted to pick and choose whether parties are granted their constitutional right to jury trials or are forced to proceed in enforcement proceedings with administrative law judges (ALJs) immune from proper and meaningful oversight.”
“Unlike defendants in federal court proceedings, respondents in SEC administrative proceedings are not afforded the right to a jury trial or the benefits and protections of the federal rules of evidence and procedure,” the filing explains. In May 2022, the Fifth Circuit Court of Appeals ruled that George Jarkesy’s Seventh Amendment right to a jury trial had been infringed. This decision came shortly after the SEC admitted in April 2022 that its staff had inappropriately accessed documents in numerous cases, including Jarkesy’s case.
Justice Department Solicitor General Elizabeth Prelogar contends the appeals court “erred in holding that Congress violated the Seventh Amendment by authorizing the SEC to bring administrative proceedings seeking civil penalties” and that the Supreme Court should reverse course. The Biden administration is asking the Supreme Court to overturn the ruling, stating that it could have “massive practical consequences” across the federal government if left intact.
The attorneys for Musk and Cuban asserted that the SEC “administrative proceedings — as they are currently structured — results in unequal results for SEC defendants.” They added: “The SEC’s insistence on administrative proceedings when federal court juries are readily available runs contrary to the SEC’s mission and harms the very investors and markets the SEC is charged with protecting.”
“In the statutes and regulations the SEC is responsible for enforcing (as well as through its own actions, public statements, and admissions), the SEC demands full transparency and disclosure for the benefit of participants in securities markets,” the lawyers for Musk and Cuban described. However, the securities regulator “uses administrative proceedings, without the rigor and deliberation resulting from a jury trial, to litigate against defendants when the SEC could more efficiently and openly litigate in federal court,” they noted.
People Also Read: Ethereum Future ETFs Start Trading in US for First Time
Moreover, they alleged: “When the SEC elects to use an administrative proceeding, whether before an ALJ or the commissioners of the SEC, the SEC itself is the sole fact finder and determines a respondent’s liability and punishment without the involvement of a jury.” In conclusion, Musk, Cuban, and other amici “urge the court to affirm the Fifth Circuit’s decision but reverse its order of remand to the Commission,” the filing reveals.