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5th Circuit Court Finds SEC Enforcement Unconstitutional [pdf]
- animal_spirits 4y agoI wish these could be automatically outlined and navigated like my code can be :(
- throwaway0a5e 4y agoI'd kill for mouse-over tooltips that let you get definitions of key terms. Turning inline references to numbered statutes and prior court rulings into links to said statues and judgements would be nice too. These aren't hard problems since legal stuff is pretty rigid about making sure these things are not ambiguous. This ruling is pretty good and readable though. Many state and federal laws are dense AF.
- junar 4y agoI think a news article would be an easier read than the entire 54-page opinion. https://www.reuters.com/legal/government/sec-in-house-judges-violate-right-jury-trial-appeals-court-rules-2022-05-18/ https://www.reuters.com/legal/government/sec-in-house-judges... This particular article also links to a copy of the opinion.
- jhugo 4y agoThe opinion is very readable, and includes a summary at the top which covers some background, the issues considered, and the decision.
- fastball 4y agoControversial opinion but I think we should all be reading way more primary sources and way fewer news articles.
- naravara 4y agoUnless you’re a lawyer you should be reading articles by lawyers instead of trying to come up with cockamamie interpretations on your own.
- usrn 4y agoThat's like arguing you shouldn't the read source for the software you use because you're not an expert.
- naravara 4y agoIt’s more like arguing you shouldn’t self diagnose your symptoms because you’re not a doctor. And also, someone who doesn’t know how to code isn’t going to be able to make sense of the source so that particular type of Dunning-Kruger problem is self correcting with programming in a way it’s not with law (or medicine).
- junofan 4y agoWho’s self-diagnosing? It’s a legal opinion. It’s published to be read by anybody.
- salawat 4y agoAhahahaha. Says someone who hasn't run into a SpringBoot application ported almost verbatim to Python.
- usrn 4y ago>as someone who doesn't know how to code You'll learn a lot by reading and it's probably easier to understand than you might think. If you don't do this other people take advantage of you. They do it a lot more than you would think.
- colinmhayes 4y agoThe whole meat of it is on the first 2 pages. Pretty simply says the SEC violated the seventh amendment by not giving the plaintiff a jury trial
- paxys 4y agoSets an interesting precedent for literally every other federal body that "acts as prosecutor and judge" while skipping the judicial system. Should everyone fighting an immigration or deportation case be able to request a jury trial? What about the military? Labor violations? EPA fines?
- djbusby 4y agoDoesn't US military have their own code of justice and court system?
- rootusrootus 4y agoSure, but this is about constraints by the Constitution, and military members do not give up their Constitutional protections when they enlist.
- rockemsockem 4y agoDon't they? I was very much under the impression that they did.
- torstenvl 4y agoNo. They absolutely do not. The closest thing that's true is this: Constitutional rights are always weighed against some government interest, and there's a lot of deference to the military with regard to government interest. So there may be things on the margins which are unconstitutional in every or nearly every civilian case, but are constitutional in the context of the government's interest in national defense. However, those rights still exist, and courts must still address those issues through the appropriate balancing test. EDIT: A cornerstone case to read, for those interested, is Parker v. Levy: https://supreme.justia.com/cases/federal/us/417/733/ https://supreme.justia.com/cases/federal/us/417/733/
- deleted 4y ago[deleted]
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- rickreynoldssf 4y agoTLDR?
- sitic 4y ago"The Dodd-Frank Act, which Congress passed after the 2008 financial crisis, expanded the SEC's ability to seek penalties in its administrative proceedings. In the ruling Wednesday, the majority said that because seeking penalties is akin to debt collection, which is a private right, the defendants were entitled to a jury trial."
- deleted 4y ago[deleted]
- rayiner 4y agoThe gist of the decision is that the SEC’s imposition of civil penalties and disgorgement violated defendants’ seventh amendment right to a jury trial. Under the seventh amendment, you have a right to a jury trial for any claim that would have been an action at law in the courts of England at the time of the founding, prior to the merger of law and equity.[1] There is an additional principle that so called “public rights,” like Social Security benefits or FCC licenses, need not be adjudicated by a real court (under Article III of the Constitution) but can be adjudicated by the executive branch. The theory is that public benefits are discretionary so the executive branch can decide how to dish them out. So you end up with administrative agencies having internal adjudicating bodies that look very much like courts, but which are not in fact courts. Ordering a party to disgorge gains from fraud is of course not a “public right” but a quintessential legal proceeding that should be brought in a real court. There’s a lot of things administrative agencies do that probably aren’t Constitutional and violate the separation of powers. Executive branch quasi-courts adjudicating claims like fraud is the tip of the iceberg. The Supreme Court upheld these statutes in the mid-20th century under the shadow of FDR’s threat of court packing. The Reagan-era Supreme Court was not inclined to roll those decisions back, but I think you will see the current Supreme Court being much more active on that front. [1] Law courts are the courts we usually think of, with juries. They are the only courts that can award damages. Courts of equity are like the Delaware chancery court—they can award certain equitable relief such as recission of a contract. Today most states and the federal system invest legal and equitable powers in the same courts, but the right to a jury trial arose in England when those courts were distinct.
- guelo 4y ago
- jonahbenton 4y agoVery helpful. Seems like it could be a huge deal. Am curious what the impact from a caseload perspective would be? How many actions are handled on an administrative basis vs how much capacity the relevant court systems have? And impact on duration- administrative actions typically handled in x time, courts take y time. Would love pointers if anyone has them.
- 29athrowaway 4y agoThat's a nice font.
- vmception 4y agoI have an axe to grind against the entire concept of ALJ's, and these guys are grinding that axe, so this makes me giddy.
- gweinberg 4y agoBased on the summary, the title is backwards-ass wrong. The courts ruled that the SEC is effectively acting as legislative, judicial, and executive government, and the executive (enforcement) part is the only one that isn't unconstitutional for them.
- troelsSteegin 4y ago"The Supreme Court is, no doubt, the nation’s most powerful court. But the 5th Circuit, the federal appeals court that covers Louisiana, Mississippi and Texas, is staking out a claim to be the most dangerous — the least wedded to respecting precedent or following an orderly judicial process. The 5th is arguably the most conservative among the country’s dozen appeals courts." - https://www.washingtonpost.com/opinions/2021/08/31/5th-circuit-is-staking-out-claim-be-americas-most-dangerous-court/ https://www.washingtonpost.com/opinions/2021/08/31/5th-circu...
- vmception 4y agoA fresh take from judges that barely get any action is something this nation needs. The conservative part is a distraction. There are other circuits across this vast land that get even less action. All circuits operate within a silo of case law within that circuit, with a much lower weighting towards precedent in other circuits, and an even lower weighting towards rulings further removed. Just need inspiration to try!
- bayareabadboy 4y agoThis is silly. A conservative opinion writer could write the exact same thing about the 9th circuit court.
- woodruffw 4y agoNo, you couldn't. The Ninth Circuit isn't nearly as politically lopsided[1]. [1]: https://en.wikipedia.org/wiki/United_States_Court_of_Appeals_for_the_Ninth_Circuit#Current_composition_of_the_court https://en.wikipedia.org/wiki/United_States_Court_of_Appeals...
- deleted 4y ago[deleted]
- bayareabadboy 4y agoA judge being nominated by a Republican isn't exactly a great indicator of the political philosophy of a justice. Quite liberal justices of the Supreme Court were nominated by Republicans (https://nymag.com/intelligencer/2019/07/john-paul-stevens-and-a-legacy-of-liberal-republican-judges.html https://nymag.com/intelligencer/2019/07/john-paul-stevens-an...). To be fair, prolly still too soon to tell with Trump. Also: https://www.google.com/search?q=site+nationalreview.com+9th+circuit https://www.google.com/search?q=site+nationalreview.com+9th+...
- Scubabear68 4y agoThis reminds me (in somewhat the opposite direction) of the circular processes at the Federal Energy Regulatory Commission (FERC), which has broad powers over interstate electricity, hydro, and natural gas pipelines. Unlike the SEC that goes after industry, FERC has frustrated thousands as a rubber stamp for industry and aggressive granting of eminent domain. These agencies are in desperate need of balance with the courts.
- vmception 4y ago> In keeping with Founding conceptions of separation of powers, the Supreme Court has made clear that Congress cannot “delegate to the Courts, or to any other tribunals, powers which are strictly and exclusively legislative.” I love this. I hope this trend catches on, I can't wait to gut these bloated agencies and force Congress to get back to work at the risk of a completely paralyzed society if they don't. Any supreme court ruling, and court ruling, and any agency ruling or even from the White House, that acts as a Super Legislature instead of some other rationale, is going to get gutted, no matter how old or "settled" the case masquerades to be. Find a different rationale to reach the same desired goal, or rely on Congress, or the government cant be involved.
- deleted 4y ago[deleted]
- civilized 4y agoI don't understand how this is supposed to work or why we would believe it would work. Why would we want politicians haggling over the nitty gritty details of how to regulate, for example, pollution? Applying cost-benefit analysis to make rules for countless pollutants and toxins? When they themselves apparently would rather delegate this to experts?
- vmception 4y agoThe courts and agencies still have the option of finding a different rationale to reach the same desired goal. If they can't, then they have to rely on Congress, if they can't then national government cant be involved. Simple order of operations.
- civilized 4y agoLegally, it's a very flimsy basis on which to attack the current structure and operation of the country. It is simply untrue that Congress is not allowed to delegate its powers, and where to draw the line has always been a subjective judgment that different courts have drawn differently. https://constitution.findlaw.com/article1/annotation03.html https://constitution.findlaw.com/article1/annotation03.html And frankly, I think the anti-administrative state people are on the payroll of polluters who want the regulators to be politicians who are more dependent on big business for funds. Congress should be allowed to leave things to the experts if it wants to. After all, it is free to change the scope of regulatory agencies at any time.
- deleted 4y ago[deleted]
- gzer0 4y agoSummary: * SEC's in-house judges violate U.S. Constitution by denying fraud defendants their right to a jury trial and acting without necessary guidance from Congress * The court ruled 2-1 in favor of hedge fund manager George Jarkesy Jr and investment advisor Patriot28 LLC, overturning an SEC administrative law judge's determination that they committed securities fraud. * Davis also split from the majority's holding that SEC judges are unconstitutionally protected from being fired. One thing to note is that SEC judges are considered ALJs (administrative law judges) and are "Inferior Officers of the United States”[2] within the meaning of the Constitution’s Appointments Clause [1]. Currently, ALJs can only be removed for cause, and the only people who can remove them are SEC Commissioners and Merit Systems Protection Board members [3]. [1] https://www.gibsondunn.com/supreme-court-rules-that-sec-aljs-were-unconstitutionally-appointed/ https://www.gibsondunn.com/supreme-court-rules-that-sec-aljs... [2] https://en.wikipedia.org/wiki/Administrative_law_judge https://en.wikipedia.org/wiki/Administrative_law_judge [3] https://nclalegal.org/2021/01/u-s-supreme-court-will-not-hear-case-challenging-removal-protections-for-secs-in-house-judges/ https://nclalegal.org/2021/01/u-s-supreme-court-will-not-hea...
- deleted 4y ago[deleted]
- Animats 4y agoThis will probably end up being worse for financial-services people who violate the Securities Act. The SEC by itself can't send someone to jail. If they have to go to court, though, the SEC may as well get the Justice Department to bring criminal charges. The court can send people to jail for up to 20 years for violating the Securities Act of 1939. Until now, the SEC seldom bothered. But if they have to prove their case in court, they may as well go all the way and go for a jail term.
- digianarchist 4y agoNot sure about everyone else but it pisses me off that criminal charges resulting in jail time is rarely pursued. The SEC and Justice Department seem to prefer fines which are not an equivalent deterrent.
- incomingpain 4y agoI have been waiting for this for months! Complete collapse of the US stock markets to follow. The important factor here is that the SEC isn't doing their job. If 2009 is of any indication, that was just the tip of the iceberg. They are meaninglessly issuing tiny fines that big funds are simply paying. Eventually the fines would amount to enough money that it doesn't hurt their bottom line but does engage the lawyers. Now it's the wild west. Feel free to commit whatever securities crimes you wish. SEC is basically not going to punish you. Sucks to be the gamestop folks. They basically just lost their infinite money.