SEC v. Jarkesy

The U.S. Supreme Court in SEC v Jarkesy held that the SEC’s administrative law judges lack jurisdiction to impose civil penalties for alleged securities fraud. The Court found the SEC’s litigation was to “punish and deter, not to compensate,” which is a type of remedy at common law that could only be enforced in courts of law because defendants are entitled to a jury trial under the Seventh Amendment to the U.S. Constitution. Thus, the SEC, in cases where parties are alleged to have committed fraud, must take them to federal court.