Why It Matters

Two years after the Supreme Court's landmark decision in SEC v. Jarkesy, a new Congressional Research Service (CRS) report finds that federal agencies face mounting constitutional pressure over how they conduct enforcement proceedings. The Supreme Court held that the Seventh Amendment guarantees defendants a jury trial when the SEC seeks civil penalties for securities fraud.

Justice Sotomayor noted in her dissent that Congress has enacted more than 200 statutes authorizing agencies to impose civil penalties.

The Big Picture

Following the Jarkesy ruling, the SEC could not use its own in-house Administrative Law Judges to adjudicate securities fraud cases.

In Intuit, Inc. v. FTC, the Fifth Circuit held the FTC's in-house ALJ adjudication of deceptive advertising claims unconstitutional under Jarkesy. Similarly, the Fifth Circuit vacated a $57 million FCC forfeiture order against AT&T for customer location data privacy violations on April 17, 2025, finding that the FCC had acted as prosecutor, jury, and judge in violation of the Seventh Amendment.

The CRS report surveys how federal appellate courts have interpreted, applied, extended, or limited Jarkesy across a wide range of federal agencies and enforcement contexts. The CRS report, published in August, examines the two-year legal and regulatory aftermath of the Supreme Court's June 2024 decision in SEC v. Jarkesy.

Carriers who voluntarily paid the fines were found to have waived their jury trial right. The Communications Act, 47 U.S.C. § 504(a), allows carriers facing FCC fines to demand de novo district court review. The FCC has sought Supreme Court review of the AT&T decision.

The Bottom Line

The Jarkesy decision has fundamentally disrupted federal enforcement across multiple agencies. While some courts have found narrow exceptions (such as when defendants voluntarily pay penalties), the broader trend is clear: agencies can no longer conduct civil penalty proceedings through in-house administrative judges without risking constitutional challenge. This shift forces agencies to either pursue cases in federal court (a slower, costlier process) or abandon enforcement actions altogether, as FERC has done with market manipulation cases.

Congress is responding with legislation like the JUDGES Act (H.R. 1929) to restructure how administrative adjudication works, but the legal landscape remains unsettled. Pending cases, including a certiorari petition challenging whether legal restitution triggers jury trial rights, suggest the Supreme Court will continue refining Jarkesy's scope for years to come.

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