High Court Liberals Warn Jarkesy’s Reach Will Be Widespread

June 27, 2024 – Media Mention

Herrick counsel, Maxim M.L. Nowak, spoke with Law360 about the U.S. Supreme Court's landmark decision in SEC v. Jarkesy, which will restrict the U.S. Securities and Exchange Commission's ("SEC") ability to utilize their in-house courts.

Max, who counsels his clients through SEC enforcement matters, said that if the Jarkesy decision does eventually erode or even ban the use of administrative law judges ("ALJs"), it could be a boon for would-be defendants, because the government would be forced to be more judicious in deciding which cases to expend its resources on and might be incentivized to settle on terms more favorable to defendants.

That's because federal court litigation "tends to be more complicated, time-consuming, and expensive than litigating in an administrative setting," Max noted.

Max also noted the possibility that the ruling could impact self-regulatory organizations, or SROs, like the Financial Industry Regulatory Authority, which licenses broker-dealers and is facing its own constitutional challenge centered around claims that it charges unlawful fees to members who violate its rules.

"If federal agency (and SRO) use of ALJs is further curtailed, Article III courts will need a massive infusion of resources to handle the thousands of new cases likely to be brought to its doors," Max explained.

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