A view of the US Supreme Court on the day the justices issue orders on pending appeals in Washington, US, June 24, 2024.
Nathan Howard | Reuters
WASHINGTON — Liberal Justice Sonia Sotomayor accused the Supreme Court's conservative majority of seizing power for itself as it limits the power of federal agencies in a series of rulings, including Thursday's ruling against the Securities and Exchange Commission.
In a dissenting opinion, she said the ruling, which limits the SEC's ability to enforce securities laws, was part of a “troubling trend” in which the court has diminished regulators' authority.
She cited other recent decisions in which the court made it easier for presidents to fire the heads of independent agencies and limit the power of in-house judges.
“Make no mistake, today’s decision is a power grab,” Sotomayor wrote. She took the extra step of reading a summary of her dissent from the bench, something justices do privately when they are upset by a decision.
In Thursday's decision, the court ruled by a 6-3 vote that the adjudication of cases by in-house SEC judges violates the right to a jury trial. The ruling could also have implications for other agencies using similar procedures.
The case is one of many the court has considered in its current session that relate to attacks by conservatives and business leaders on the power of federal agencies. The court's conservative majority (6-3) is often sympathetic to such arguments.
Sotomayor pointed to the ongoing attack on what critics have called the “administrative state.”
“Litigants seeking to further dismantle the ‘administrative state’ have reason to rejoice in their victory today, but we who cherish the rule of law have nothing to celebrate,” she wrote.
The challenge focuses on how the SEC enforces securities laws, including those prohibiting insider trading. The SEC has long used internal procedures headed by administrative law judges. The agency could also file a lawsuit in federal court. In both sets of actions, it can seek financial penalties.
Those who have undergone in-house arbitration have complained, saying the process violates their rights and gives the SEC too much power by creating a home-court advantage.
In the majority opinion, Chief Justice John Roberts responded to Sotomayor, saying it would “allow Congress to concentrate the roles of prosecutor, judge, and jury in the hands of the executive branch.”
He added that such a result is “the complete opposite” of what the principle of separation of powers in the Constitution requires.
Hedge fund manager George Garkisi has filed a legal challenge after facing allegations from the Securities and Exchange Commission that he violated securities laws by making false statements and omitting relevant information in communications with investors while overseeing two hedge funds.
Jarkeesi and his company were ordered to pay a $300,000 fine, and he was barred from certain roles in the securities industry after being subjected to internal actions in 2014. The company was also ordered to return nearly $685,000 in what the SEC deemed “ill-gotten gains.” “
Jarecki's legal campaign has been supported by billionaires Elon Musk and Mark Cuban.
A three-judge panel of the New Orleans-based US Court of Appeals for the Fifth Circuit ruled against the agency, prompting the SEC to ask the Supreme Court to intervene.
