SEC Administrative Courts Survive Industry Ban Challenge

For years, there have been efforts to chip away at the Securities and Exchange Commission's (SEC) administrative enforcement powers. In particular, in 2024, the Supreme Court ruled in SEC v. Jarkesy, 603 U.S. 109 (2024), that when the SEC seeks civil monetary penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial, foreclosing the use of the SEC's in-house courts in such instances. That same year, the Supreme Court ended Chevron deference;¹ and the following year, the U.S. District Court for the District of Columbia heard a challenge to the constitutionality of an SEC follow-on action in which the U.S. Department of Justice indicated it would no longer defend the tenure protections of SEC and other agency administrative law judges against claims that they violate separation-of-powers principles and Article II of the Constitution.² Notwithstanding these cases, in a more recent challenge to the constitutionality