The U.S. Supreme Court has significantly restricted the Securities and Exchange Commission's (SEC) ability to use in-house judges for securities fraud cases. This landmark ruling, stemming from SEC v. Jarkesy, impacts how the SEC pursues civil penalties.

On J, the Supreme Court ruled in SEC v. Jarkesy that when the Securities and Exchange Commission (SEC) seeks civil penalties from defendants for securities fraud, the defendant is entitled to a jury trial in federal court. This decision curbed the Securities and Exchange Commission’s ability to press complaints before in-house judges, saying defendants have a constitutional right to a jury trial.

The U.S. Supreme Court ruled that the SEC must bring securities fraud actions seeking civil penalties in federal court, entitling defendants to a jury trial. This shifts the balance of power, providing defendants with more robust constitutional protections.

An SEC administrative law judge had determined he violated securities laws and assessed a $300,000 civil fine. He sued in federal court alleging his constitutional rights were violated, ultimately leading to the Supreme Court's decision.

On J, the United States Supreme Court issued a landmark decision in SEC v. Jarkesy, ruling that the Securities and Exchange Commission’s (SEC) use of in-house administrative law judges to levy civil penalties in fraud cases is unconstitutional, particularly when the penalties are substantial. This ruling has broad implications for the SEC's enforcement capabilities and the rights of individuals accused of securities fraud.