Elon Musk and Mark Cuban Support Case Against SEC
Tesla CEO Elon Musk, along with Dallas Mavericks owner Mark Cuban and several others, have filed an amicus brief in support of a Supreme Court case challenging the U.S. Securities and Exchange Commission (SEC)’s administrative proceedings. The brief was also joined by Phillip Goldstein, Nelson Obus, Manouch Moshayedi, and the Investor Choice Advocates Network (ICAN).
The Case Against the SEC
The case, known as SEC v. Jarkesy, questions the constitutionality of the SEC’s use of in-house judges. Plaintiff George Jarkesy argues that the commission-appointed administrative law judge violates his Seventh Amendment right to a trial by jury.
The Argument in the Amicus Brief
The amicus brief highlights that the SEC started handling more cases internally after facing losses in jury trials for insider trading cases. The filing emphasizes that it is crucial for the SEC not to selectively decide whether parties are entitled to a jury trial or forced into enforcement proceedings with administrative law judges who lack proper oversight.
Lack of Rights in Administrative Proceedings
The filing points out that respondents in SEC administrative proceedings do not have the right to a jury trial or the benefits of federal rules of evidence and procedure, unlike defendants in federal court proceedings.
Previous Rulings and Biden Administration’s Stance
The Fifth Circuit Court of Appeals ruled in May 2022 that Jarkesy’s Seventh Amendment rights were violated. However, the Justice Department Solicitor General Elizabeth Prelogar argues that Congress did not violate the Seventh Amendment by authorizing the SEC to bring administrative proceedings seeking civil penalties. The Biden administration is urging the Supreme Court to reverse the ruling due to potential consequences across the federal government.
Unequal Results and Lack of Transparency
Musk and Cuban’s lawyers assert that the SEC’s administrative proceedings lead to unequal outcomes for defendants. They argue that the SEC’s use of administrative proceedings contradicts its mission and harms investors and markets. The lawyers also criticize the lack of transparency and rigor in these proceedings, as they do not involve a jury trial.
The Request to the Supreme Court
Musk, Cuban, and other amici ask the Supreme Court to affirm the Fifth Circuit’s decision but reverse its order of remand to the Commission. They urge the court to endorse the reasoning of the Fifth Circuit to ensure that the SEC litigates appropriately in all circuits.
Hot Take: Musk and Cuban Stand Against SEC Proceedings
Tesla CEO Elon Musk and Dallas Mavericks owner Mark Cuban have joined forces to support a case challenging the constitutionality of the U.S. Securities and Exchange Commission (SEC)’s administrative proceedings. In an amicus brief filed with the Supreme Court, they argue that defendants should have the right to a jury trial instead of being subjected to enforcement proceedings with administrative law judges. They criticize the SEC for using administrative proceedings without transparency and deliberation, which goes against their mission of protecting investors and markets. Musk and Cuban, along with other amici, call on the court to endorse the Fifth Circuit’s decision and ensure appropriate litigation by the SEC in all circuits.
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