Supreme Court Will Weigh Federal Agencies’ Authority

SEC v. Jarkesy, recently granted Certiorari by the U.S. Supreme Court, will be consequential for all federal agencies. At issue is the SEC’s discretion in deciding which cases will be tried by an SEC administrative law judge and which will be tried in a federal court.  It will also consider whether delegation of certain authority to the SEC relating to rules and regulations, and the Commission’s discretionary authority to make policy determinations where Congress has not provided adequate guidance is constitutional. If the Supreme Court finds that Congress is violating the Constitution by delegating overly broad authority to agencies, it could have far-reaching consequences. Many federal agencies use their own administrative tribunals for various purposes, including civil enforcement proceedings, and some besides the SEC employ administrative law judges. Forcing the SEC to go to federal court could benefit individuals or entities accused of securities fraud. They might stand a better chance of defending those claims. The SEC could also opt to prosecute fewer fraud cases.