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Page Number: 9.0

4 

SEC v. JARKESY 

Opinion of the Court 

Sanctions Act of 1984, §2, 98 Stat. 1264; Securities Enforce-
ment Remedies and Penny Stock Reform Act of 1990, §§101, 
201–202, 104 Stat. 932–933, 935–938.  That is no longer so. 
In 2010, Congress passed the Dodd-Frank Wall Street Re-
form and Consumer Protection Act (Dodd-Frank Act), 124 
Stat. 1376.  That Act “ma[de] the SEC’s authority in admin-
istrative penalty proceedings coextensive with its authority
to seek penalties in Federal court.”  H. R. Rep. No. 111–687, 
p. 78 (2010).  In other words, the SEC may now seek civil
penalties in federal court, or it may impose them through
its  own  in-house  proceedings.    See  Dodd-Frank  Act, 
§929P(a), 124 Stat. 1862–1864 (codified in relevant part as 
amended at 15 U. S. C. §§77h–1(g), 78u–2(a), 80b–3(i)(1)). 
Civil  penalties  rank  among  the  SEC’s  most  potent  en-
forcement  tools.    These  penalties  consist  of  fines  of  up  to 
$725,000  per  violation.    See  §§77h–1(g),  78u–2,  80b–3(i).
And the SEC may levy these penalties even when no inves-
tor has actually suffered financial loss.  See SEC v. Blavin, 
760 F. 2d 706, 711 (CA6 1985) (per curiam). 

B 
Shortly after passage of the Dodd-Frank Act, the SEC be-
gan  investigating  Jarkesy  and  Patriot28  for  securities 
fraud.  Between 2007 and 2010, Jarkesy launched two in-
vestment funds, raising about $24 million from 120 “accred-
ited” investors—a class of investors that includes, for exam-
ple, financial institutions, certain investment professionals, 
and high net worth individuals.  App. to Pet. for Cert. 72a–
73a,  110a,  n. 72;  see  17  CFR  §230.501.    Patriot28,  which 
Jarkesy managed, served as the funds’ investment adviser. 
According to the SEC, Jarkesy and Patriot28 misled inves-
tors in at least three ways: (1) by misrepresenting the in-
vestment strategies that Jarkesy and Patriot28 employed, 
(2)  by  lying  about  the  identity  of  the  funds’  auditor  and 
prime broker, and (3) by inflating the funds’ claimed value