Elon Musk, Mark Cuban Challenge SEC’s Proceedings in Amicus Brief

“The SEC’s insistence on administrative proceedings when federal court juries are readily available runs contrary to the SEC’s mission and harms the very investors and markets the SEC is charged with protecting.”

Details from the Court

The brief underscores that the prevailing process the SEC utilizes to handle administrative reviews provides them with a significant “undue advantage” against the accused.

As per available court documents, Jarkesy initiated two hedge funds valued at $24 million in 2007 and 2009, primarily investing in burgeoning businesses, with Patriot28 serving as the investment advisor.

Subsequently, the SEC accused both Jarkesy and Patriot28 of duping investors. Leveraging the Dodd-Frank Act in 2013, the regulatory body delegated an internal judge to review and consequently imposed a monetary penalty on Jarkesy.

In retaliation, Jarkesy lodged an appeal, asserting that the SEC’s approach infringed upon his Seventh Amendment rights, which guarantee the right to a jury trial.

In 2020, the commission reaffirmed its initial decision. However, it later came to light that the SEC had unauthorized access to documents related to several cases, Jarkesy’s being among them.

A significant twist occurred in May 2022 when, based on these fresh revelations, the U.S. Court of Appeals for the Fifth Circuit sided with Jarkesy, revalidating his Seventh Amendment rights. This verdict prompted the US Department of Justice to contest the decision, with the Supreme Court scheduled to review the matter in November 2023.