SEC Enforcement Actions After Jarkesy: Restrictions on SEC's Pursuit of Civil Penalties

This CLE webinar will discuss the U.S. Supreme Court's recent decision in Securities and Exchange Commission v. Jarkesy and its impact on future enforcement actions where the SEC seeks civil monetary penalties. The panel will provide an overview and background of the decision, analyze the decision's potential impact on current and future SEC enforcement actions, and explore what questions the decision left unanswered and how these issues will likely play out in the future.

On June 27, 2024, the U.S. Supreme Court issued its much-anticipated opinion in SEC v. Jarkesy holding that when the SEC seeks to impose civil monetary penalties for securities fraud, it must do so in the federal courts rather than before administrative law judges (ALJs). Prior to this ruling, the SEC could elect to litigate fraud cases before ALJs with subject matter expertise.

In construing the SEC's antifraud provisions, the Court found that these types of claims were analogous to common law fraud and therefore "must be heard by a jury." Rejecting the SEC's argument that the "public rights" exception applied, the Court further explained that if a claim is "in the nature of an action at common law, then the matter presumptively concerns private rights, and adjudication by an Article III court is mandatory."

The Jarkesy decision is generally seen as a win for defendants in SEC enforcement actions and provides a basis for challenging the SEC's election of an ALJ in other types of actions beyond fraud. However, the decision left several unanswered questions which will likely result in future litigation for years to come.

Listen as our expert panel analyzes the Jarkesy decision and its potential impact on current and future SEC enforcement actions and provides insights on advising clients on the impact of this decision going forward.