Elon Musk and Mark Cuban Challenge SEC’s In-House Trials
Elon Musk and Mark Cuban have teamed up to challenge the U.S. Securities and Exchange Commission’s (SEC) practice of conducting in-house trials without juries. They have jointly submitted an amicus brief to the Supreme Court, raising concerns about the legitimacy of the SEC’s administrative proceedings and their impact on the right to a jury trial as guaranteed by the Seventh Amendment.
The Case of SEC vs. Jarkesy
The central focus of this challenge is the case of SEC vs. Jarkesy. George Jarkesy, the plaintiff, argues that his Seventh Amendment rights were violated when the agency utilized an internal adjudication process with an administrative law judge appointed by the commission. Musk and Cuban assert that this creates a situation where a single entity acts as judge, jury, and executioner, raising concerns about impartiality and due process.
Concerns about Fairness
Musk and Cuban are particularly concerned about the fairness of these in-house trials. They highlight instances where SEC employees were found to have wrongly accessed files in various cases, including Jarkesy’s case, which raises doubts about the impartiality of these proceedings.
Additionally, they point out that in July 2023, the SEC introduced new regulations mandating public companies to promptly disclose major data breaches within four days. This obligation remains in place despite internal control deficiencies related to file sharing being identified in 2021 but reported a year later.
Musk and Cuban’s Appeal to the Justices
The Justice Department’s Solicitor General, Elizabeth Prelogar, argues that the 5th Circuit’s decision favoring Jarkesy was incorrect. She contends that Congress did not violate the Seventh Amendment by granting the SEC the authority to initiate administrative proceedings for civil penalties.
Prelogar is urging the Supreme Court to overturn its previous ruling. On November 29, the Supreme Court will review an appeal from the Biden administration, challenging the 5th U.S. Circuit Court of Appeals’ decision in support of George Jarkesy.
Musk himself is currently facing a lawsuit with the SEC. The regulator is seeking court involvement to compel Musk’s testimony regarding his acquisition of Twitter and his public statements related to the deal.
Musk and Cuban are appealing to the justices to uphold the 5th Circuit’s decision and “reverse its direction of remand to the commission.” Their lawyers argue that choosing administrative proceedings instead of federal court juries goes against the SEC’s mandate and poses a risk to investors and the markets that the agency is obligated to protect.
Hot Take: Elon Musk and Mark Cuban Unite Against SEC’s In-House Trials
Elon Musk and Mark Cuban have joined forces in a bid to challenge the SEC’s practice of conducting in-house trials without juries. They argue that this violates individuals’ rights to a fair trial and raises concerns about impartiality. By submitting a joint amicus brief to the Supreme Court, they aim to shed light on these issues and push for a change in how administrative proceedings are conducted. This case has significant implications not only for Musk and Cuban but also for future cases involving the SEC. It remains to be seen how the Supreme Court will rule on this matter and whether it will impact the SEC’s practices moving forward.
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