CASE
SUMMARY
George Jarkesy was adjudicated by an Administrative Law Judge (ALJ) who was improperly insulated from removal. Mr. Jarkesy was also denied his jury trial rights and equal protection of the law, among other problems. The U.S. Securities and Exchange Commission (SEC) Final Order appealed in this case was issued seven years after his administrative proceeding ended, which puts the lie to the notion that ALJ proceedings save time.
George R. Jarkesy, Jr. was an investment professional and host of a nationally syndicated talk-radio program at the time when SEC conducted its administrative proceeding against him. He raised a constitutional claim against the SEC’s ALJs, who enjoy multiple layers of protection from removal by the President. In an earlier precedent called Free Enterprise Fund v. Public Co. Accounting Oversight Board, the Supreme Court made clear that officers of the U.S. may not be insulated from removal by multiple layers of protection without running afoul of the clause in Article II of the Constitution that requires the President to “take Care that the Laws be faithfully executed.”
In addition to dismissing Mr. Jarkesy’s constitutional removal claim, SEC violated his Seventh Amendment jury-trial rights as well as the equal protection component of the Fifth Amendment’s Due Process Clause. The Dodd-Frank Act empowers SEC to obtain a jury trial by suing in federal court or avoid a jury trial by initiating an administrative proceeding. Enforcement targets, like Jarkesy, do not have a similar option. Thus, the law unfairly deprives them of the same right to demand a jury trial that SEC has—a blatantly discriminatory rule.
In June 2024, the Supreme Court ruled in SEC v. Jarkesy that the Seventh Amendment jury trial right applies to administrative proceedings, a historic NCLA victory.