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Comment by rayiner | Hacker News Reader

The Supreme Court decided that the SEC can’t prosecute people seeking monetary fines and have it be decided by its own employees who serve as both judge and jury.

This should have been a straight forward case and it’s perplexing that it’s not being covered that way. If you get a traffic fine here in Maryland, you get to contest it in Maryland district court, in front of a judge that is nominated by the governor and confirmed by the state senate.

There is a precedent for executive branch quasi-judicial proceedings when it comes to government benefits, like the social security administration administrative judges deciding retiree checks. But this is completely different. It’s a punishment.

This doesn’t limit the SEC’s effectiveness at all. The SEC, of course, can bring lawsuits for civil damages in real courts—like every other executive branch agency both at the federal level and state level.

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One reason it wasn’t as straightforward as your right to contest a traffic ticket in court is that Congress had expressly authorized the SEC to impose these monetary fines.

At any rate, that the decision would strike down this law was a foregone conclusion for court watchers. Most of the interest was over the possibility that the court would more severely curtail other SEC enforcement authorities common to many administrative agencies or even find that its basic structure was unconstitutional.

Maryland’s constitution has a separation of powers just like the U.S. Constitution. Do you think the Maryland legislature could authorize police to give tickets and have a different police department employee decide guilt and impose fines? You could have an appeal to a real court, but they would have to give deference to the factual determinations of the police department employee and overturn them only if there was essentially no evidence in the record to support the conclusion of guilt.

No, I don’t think think that would be permissible, especially after this decision clarifying that it is not :)

Serious question: Suppose the statute were rewritten to say, you can't do public offerings [etc.] in commerce without agreeing to submit to the SEC's adjudicatory process and waiving your right to a jury trial — you don't have to do so, but if you don't, you can't do public offerings, etc. Would that pass muster?

If they did mandatory binding arbitration it would most likely work. Arbitration trumps everything else it seems.

While the case was decided on seventh amendment grounds in the seventh amendment can be waived I don’t think the government can get around the separation of powers issues that are also in the background.

You would need to fit the underlying conduct into something that can be called a public right. Maybe the government could require such waiver for use of a government run exchange.

> separation of powers issues ... in the background

Under the Exceptions and Regulations Clause in Article III, every federal court exercises its power at the sufferance of Congress (apart from cases under SCOTUS's original jurisdiction). Securities-fraud cases brought by the SEC are creatures of federal statute, not (non-existent) federal common law (cf. Erie), and so the Seventh Amendment jury right arguably doesn't apply. Under the E&R Clause, Congress could authoritatively say so, overruling past SCOTUS ipse dixit extensions of the Seventh Amendment to analogous cases.

Yup. If this isn't Congress' intent, all they have to do is pass a law saying so. "...when Congress addresses a question previously governed by a decision rested on federal common law the need for such an unusual exercise of lawmaking by federal courts disappears." - MILWAUKEE v. ILLINOIS via Wikipedia.

Given how A to B to C the logic of the ruling is, this case seems like a gigantic waste of the Court's time, though it was 6-3. So there was significant dissent.

I don't see how this weakens SEC enforcement. They can still seek enforcements. They just have to seek them via a trial by jury of your peers, which is one of the most foundational aspects of American law and one of the issues that led to the American Revolution.

In your opinion, which civilian courts are best suited for prosecuting financial crimes?

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