Jarkesy v. SEC, 51 F.4th 644

Petitioners George R. Jarkesy, Jr. and Patriot28, L.L.C. sought review of an SEC order finding securities fraud after an in-house administrative enforcement proceeding.
The Fifth Circuit panel majority held that the SEC proceeding violated multiple constitutional provisions: the Seventh Amendment jury right, the nondelegation doctrine, and Article II removal principles.
The government sought rehearing en banc; the court denied rehearing en banc (poll: 6 in favor, 10 against).
A multi-judge dissent (Haynes, joined by Stewart, Dennis, Graves, Higginson; with Senior Judge Davis concurring in the result) argued the panel’s holdings were incorrect and warranted full-court review.
Central statutory context: Dodd-Frank’s provision permitting the SEC to choose in-house administrative enforcement or federal-court litigation.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether SEC in-house enforcement violated the Seventh Amendment jury right	Jarkesy: agency enforcement deprived petitioners of their Seventh Amendment jury trial right	SEC: enforcement addresses public rights so Congress may assign factfinding to administrative tribunals without a jury	Panel held for petitioners — public-rights exception did not apply; jury right was violated (en banc rehearing denied)
Whether Dodd-Frank’s forum-choice power unlawfully delegated legislative power	Jarkesy: allowing the SEC to choose in-house v. federal-court enforcement lacks an intelligible principle and is an unconstitutional delegation	SEC: Congress provided adequate guidance; choice is executive/adjudicatory discretion, not an unlawful legislative delegation	Panel held for petitioners — statute was an impermissible delegation (en banc rehearing denied)
Whether removal protections for SEC ALJs violate Article II	Jarkesy: for-cause removal protections insulate ALJs who perform significant executive functions, violating Article II	SEC: ALJs perform adjudicatory duties meriting insulating protections; Lucia does not require presidential removal control	Panel held for petitioners — removal restrictions on SEC ALJs are unconstitutional (en banc rehearing denied)

Atlas Roofing Co. v. Occupational Safety & Health Rev. Comm’n, 430 U.S. 442 (1977) (public-rights exception can permit adjudication without a jury)
Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989) (discusses jury-trial/public-rights boundary; contains influential dicta)
Crowell v. Benson, 285 U.S. 22 (1932) (definition and scope of public rights and administrative adjudication)
Lucia v. SEC, 138 S. Ct. 2044 (2018) (SEC ALJs are officers under the Appointments Clause)
Free Enterprise Fund v. Public Co. Accounting Oversight Bd., 561 U.S. 477 (2010) (removal protections may violate separation of powers)
Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183 (2020) (removal power and executive control over officers)
Morrison v. Olson, 487 U.S. 654 (1988) (upholding some removal protections to preserve adjudicative independence)
Humphrey’s Executor v. United States, 295 U.S. 602 (1935) (upholding removal protection for independent-agency officials)
Heckler v. Chaney, 470 U.S. 821 (1985) (agency discretion not to enforce is presumptively unreviewable)