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IMMIGRATION MARCH 29, 2024 | The Indian Eye 46
The Potential Impact
of SEC v. Jarkesy on
Immigration Law and
EB-5 Lawyers
BY CYRUS D. MEHTA AND il penalties violate the Sev- “take Care that the Laws be lation through agency adju- ple, could be hindered from
enth Amendment right to a faithfully executed.” Oral dication violates the Seventh holding hearings to address
KAITLYN BOX*
jury trial, whether the statute argument focused primarily Amendment, and that Con- an employer’s failure to
allowing the SEC to enforce on whether the SEC’s en- gress’ open-ended grant of comply with a Labor Con-
n November 29, securities laws through agen- forcement system deprives authority to the SEC to de- dition Application (LCA).
2023, the Supreme
OCourt heard oral cy adjudication rather than those charged with SEC vio- termine whether to initiate During the oral argument,
in federal court violates the lations of the right to a jury
enforcement proceedings for which only focused on the
argument in Securities and nondelegation doctrine, and trial. Jarkesy argued that an securities fraud is impermis- right to a jury trial under
Exchange Commission whether the Congress’ de- SEC adjudication triggers a sible under the Constitution. the Seventh Amendment,
v. Jarkesy, a case that in- cision to allow Administra- right to a jury trial because it Further, the court held that Justices Kagan and Soto-
volves several key questions: tive Law Judges (ALJs) to is more akin to a civil fraud “for-cause” removal protec- mayor expressed concerns
whether the statues allowing be removed only for “good lawsuit imposing monetary tions for ALJs violates the that Jarkesy could result in
the Securities and Exchange cause” violates Article II penalties than a proceeding “take care” clause of the radical changes to the immi-
Commission (SEC) to bring of the Constitution, which involving a “public right”, Constitution by impermissi- gration court system. If the
administrative enforcement commands the President to where agency adjudication is bly insulating them from re- Supreme Court’s holding
proceedings that impose civ-
appropriate. moval by the President. brings about the evisceration
An ALJ found Jark- of the immigration courts,
esy, an investment ad- The outcome of Jarkesy Congress could be forced to
visor, guilty of violating create an independent immi-
securities law by fraud- could have significant gration court system under
ulently overvaluing the impacts on immigration Article I of the Constitution
investments he oversaw, as a replacement. An Article
and making misrepre- law. The same arguments 1 court would ensure that IJs
sentations to investors that could invalidate the are independent from polit-
about the management ical interference as they are
of the funds. He was authority of ALJs in Jark- currently under the purview
fined $300,000, barred esy could also be applied of the Attorney General
from securities industry within the Department of
activities, and his firm to Immigration Judges Justice.
was ordered to repay (IJs), potentially depriv- S. Michael McColloch,
investors. Jarkesy chal- counsel for Jarkesy, argued
lenged the SEC’s en- ing them of the ability that the court should hold
forcement action at the to hear cases. Because that when the government
5th Circuit, arguing that brings a case with the “same
he was deprived of his IJs are non-ALJ adjudi- essential function” as a tra-
constitutional right to cators, their authority ditional lawsuit for claims
a jury trial, that “Con- such as fraud, it should have
m of gress unconstitutional- could be even more vul- to bring the case in federal
CYRUS D. MEHTA & PARTNERS PLLC ly delegated legislative nerable to the challeng- court, where a jury trial right
power to the SEC by
would apply. However, when
failing to provide it with es issued by Jarkesy. pressed further he empha-
an intelligible principle sized that Jarkesy should not
by which to exercise the Additionally, if the apply to adjudicating gov-
delegated power”, and Supreme Court’s holding ernment benefits and debts
that restrictions on the eliminates ALJs at the SEC, and that the authority of IJs
removal of ALJs vio- lawsuits challenging the should not be impacted by
late Article II. The Fifth authority of ALJs at other the outcome of the case.
Circuit agreed, holding agencies are likely to follow, A broad Supreme Court
2 6th Floor that the SEC’s choice of meaning that the Depart- ruling in Jarkesy affirming
enforcing securities vio- ment of Labor, for exam- all the three aspects of the
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