In Securities and Exchange Commission v. Jarkesy, No. 22-859, 2024 WL 3187811 (U.S. June 27, 2024), the United Stated Supreme Court (Roberts, C.J.) held that when the Securities and Exchange Commission (“SEC”) seeks civil penalties against a defendant for securities fraud, the Seventh Amendment of the United States Constitution entitles the defendant to a trial by jury. This decision was based upon the Court’s interpretation that the SEC’s antifraud provisions replicate common law fraud, and thus actions for violations of these provisions implicate the Seventh Amendment right. The Court determined that the “public rights” exception, which allows certain matters to be resolved outside of Article III courts without a jury, does not apply in this context because the action does not fall within the distinctive areas involving governmental prerogatives traditionally resolved without Article III adjudication. This ruling curtails the SEC’s authority to impose penalties for fraud, and could potentially affect the enforcement capabilities of agencies enforcing federal law.

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