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![handle is hein.crs/goveqqc0001 and id is 1 raw text is: SEC v. Jarkesy: Constitutionality of
Administrative Enforcement Actions
September 16, 2024
Congress frequently delegates to agencies the power to take enforcement actions against parties who do
not comply with applicable statutes or regulations that the agencies administer. For decades, Congress has
enacted statutes that authorize regulatory agencies to impose civil penalties for certain violations. In many
of those instances, the relevant statute requires the agency to pursue such penalties through a legal action
filed in federal court. Congress has also authorized some agencies to bring enforcement actions before the
agencies' own in-house adjudicatory systems. The circumstances under which Congress may authorize
agencies to bring in-house enforcement actions was the subject of Securities and Exchange Commission
(SEC) v. Jarkesy. In June 2024, the Supreme Court ruled 6-3 in Jarkesy that the Seventh Amendment's
right to a jury trial applies to certain enforcement actions brought by an agency and, therefore, in-house
administrative adjudication of such actions is unconstitutional. This Sidebar discusses Jarkesy and its
implications for Congress and federal agencies.
Background on SEC v. Jarkesy
Congress, through various statutes, has tasked the SEC with enforcing statutes and regulatory programs
that combat securities fraud and promote market transparency. The SEC may enforce federal securities
laws in two ways: (1) by bringing an action for civil penalties in federal court and (2) by pursuing civil
penalties before the SEC's own in-house tribunal. Though the agency had the authority to bring some
enforcement actions in-house prior to 2010, Congress expanded the SEC's authority to bring in-house
actions when it enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).
The House report accompanying the legislation stated that Dodd-Frank ma[de] the SEC's authority in
administrative penalty proceedings coextensive with its authority to seek penalties in Federal court.
Thus, under Dodd-Frank, the SEC could elect to use in-house proceedings for any enforcement action that
it could otherwise bring in federal court.
As the Supreme Court noted in Jarkesy, the SEC's choice of venue affected the procedural protections
available to the parties. If the SEC brought an enforcement action to federal court, a jury could make
factual determinations in the case, an Article III judge would preside over the proceedings, and the
Federal Rules of Evidence would apply. If the SEC brought the action in an administrative proceeding, a
jury would not be available and the facts would be determined by the SEC or an administrative law judge
Congressional Research Service
https://crsreports.congress.gov
LSB11229
CRS Legal Sidebar
Prepared for Members and
Committees of Congress](ViewImageLocal?handle=hein.crs/goveqqc0001&div=1&collection=&method=preview&ext=.png&size=3)