Elon Musk, Mark Cuban and others have collaboratively submitted a shared amicus brief to the Supreme Court of the United States to raise concerns about the U.S. Securities and Exchange Commission’s (SEC) approach to conducting internal proceedings without the inclusion of juries.
Mark Cuban, a billionaire crypto investor and decentralized finance (DeFi) advocate who actively engages in the cryptocurrency space, and Elon Musk, the CEO of Tesla and SpaceX, who recently rebranded Twitter into X and wields influence and controversy in crypto, both assert that these administrative proceedings produce disparate outcomes for individuals facing SEC charges. Consequently, this approach has raised concerns about the potential infringement of the U.S. Constitution’s Seventh Amendment right to a jury trial.
The context of this legal challenge centers around the SEC vs. Jarkesy case. George Jarkesy contends that his Seventh Amendment rights were violated in this specific case. He argues that the SEC’s internal adjudication process, which lacks a jury and is overseen by an administrative law judge appointed by the commission, contradicts these rights. This effectively results in a single entity fulfilling the roles of judge, jury and enforcer.
Musk, Cuban and other amici curiae highlight a shift in the SEC’s approach between 2013 and 2014. They observed that the SEC started handling more cases internally rather than through federal courts. This change occurred after a string of unsuccessful insider trading cases were tried before juries.
Musk is facing his third notable legal dispute with the financial regulatory agency. This comes in the wake of prior lawsuits in 2018 and 2019. Currently, the regulatory body is pursuing the involvement of a federal court to request Musk’s testimony regarding his acquisition of Twitter, with a specific focus on his public statements about the transaction, as disclosed in legal records.
Nonetheless, the amici curiae maintain a steadfast position, contending that opting for administrative proceedings over the option of federal court juries runs counter to the SEC’s stated mission. Furthermore, such decisions could potentially negatively impact investors and the markets the SEC is committed to protecting.