SEC v. Jarkesy
SEC v. Jarkesy is a 2024 United States Supreme Court opinion, which ruled that any defendant who is facing a civil penalty from a federal agency, is entitled to a jury trial under the Seventh Amendment.
The case involved a securities dealer who, along with a limited liability company (LLC) that he formed, were investigated by the Securities and Exchange Commission for securities fraud. The SEC ruled that the LLC had to disgorge nearly $1 million in profits and assessed Jarkesy a $300K civil penalty.
Jarkesy appealed, arguing that the civil penalty required the SEC to bring the suit in federal court, where he would have a right to a jury trial under the Seventh Amendment. However, the lower and appellate courts ruled against him.
By a 6-3 verdict along ideological lines, the Supreme Court reversed. The opinion noted a difference between acts designed to "right the wrong" (i.e., the disgorgement) versus those designed to "deter wrongful conduct" (i.e., the civil penalty). Those designed for the latter, the Court ruled, fell under the "suits at common law" clause in the Seventh Amendment, and thus a defendant had the right to a jury trial.