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SEC v. JARKESY 

Syllabus 

proceedings.

Shortly after passage of the Dodd-Frank Act, the SEC initiated an 
enforcement  action  for  civil  penalties  against  investment  adviser 
George Jarkesy, Jr., and his firm, Patriot28, LLC for alleged violations
of the “antifraud provisions” contained in the federal securities laws.
The  SEC  opted  to  adjudicate  the  matter  in-house.  As  relevant,  the 
final order determined that Jarkesy and Patriot28 had committed se-
curities violations and levied a civil penalty of $300,000.  Jarkesy and 
Patriot28 petitioned for judicial review.  The Fifth Circuit vacated the 
order on the ground that adjudicating the matter in-house violated the 
defendants’ Seventh Amendment right to a jury trial. 

Held: When the SEC seeks civil penalties against a defendant for securi-
ties  fraud,  the  Seventh  Amendment  entitles  the  defendant  to  a  jury
trial.  Pp. 6–27. 

(a) The  question  presented  by  this  case—whether  the  Seventh 
Amendment entitles a defendant to a jury trial when the SEC seeks 
civil penalties for securities fraud—is straightforward.  Following the 
analysis set forth in Granfinanciera, S. A. v. Nordberg, 492 U. S. 33, 
and Tull v. United States, 481 U. S. 412, this action implicates the Sev-
enth  Amendment  because  the  SEC’s  antifraud  provisions  replicate 
common law fraud.  And the “public rights” exception to Article III ju-
risdiction  does  not  apply,  because  the  present  action  does  not  fall 
within  any  of  the  distinctive  areas  involving  governmental  preroga-
tives  where  the  Court  has  concluded  that  a  matter  may  be  resolved 
outside of an Article III court, without a jury. 

(b) The Court first explains why this action implicates the Seventh 

Amendment. 

(1) The right to trial by jury is “of such importance and occupies
so firm a place in our history and jurisprudence that any seeming cur-
tailment of the right” has always been and “should be scrutinized with 
the  utmost  care.”  Dimick  v.  Schiedt,  293  U. S.  474,  486.    When  the 
British attempted to evade American juries by siphoning adjudications 
to juryless admiralty, vice admiralty, and chancery courts, the Ameri-
cans protested and eventually cited the British practice as a justifica-
tion for declaring Independence.  In the Revolution’s aftermath, con-
cerns that the proposed Constitution lacked a provision guaranteeing 
a jury trial right in civil cases was perhaps the “most success[ful]” cri-
tique  leveled  against  the  document  during  the  ratification  debates.
The Federalist No. 83, p. 495.  To fix that flaw, the Framers promptly
adopted  the  Seventh  Amendment.  Ever  since,  “every  encroachment 
upon [the jury trial right] has been watched with great jealousy.”  Par-
sons v. Bedford, 3 Pet. 433, 446.  Pp. 7–8.

(2) The Seventh Amendment guarantees that in “[s]uits at com-
mon law . . . the right of trial by jury shall be preserved.”  The right