Recently, Elon Musk and Mark Cuban joined forces to submit a joint amicus brief to the Supreme Court. In their submission, both have spoken out against the Securities and Exchange Commission’s (SEC) internal adjudication method. It’s worth noting that this SEC process does not require a jury.
Elon Musk and Mark Cuban argue that such administrative proceedings result in an unequal outcome for the defendants of the SEC. Furthermore, this approach contradicts the Seventh Amendment, which eliminates the right to trial by jury.
The interesting aspect is that both billionaires emphasized changes in the SEC’s approach from 2013 to 2014. They accused the SEC of shifting towards handling many cases through internal means rather than in federal courts. This shift came after a series of unsuccessful insider trading cases before juries.
However, the method of bypassing jury trials has encountered numerous issues. Notably, in April 2022, the SEC admitted that their staff had made mistakes in accessing court record files and issued incorrect rulings in several cases, including the Jarkesy lawsuit.
On the other hand, U.S. Department of Justice Solicitor General Elizabeth Prelogar argued that the Fifth Circuit’s decision in favor of Jarkesy was incorrect. She believes that Congress did not violate the Seventh Amendment when allowing the SEC to conduct administrative proceedings for civil penalties. Therefore, she is urging the Supreme Court to overturn its decision.
Currently, Elon Musk is facing his third significant legal challenge from the financial watchdog agency, following previous lawsuits in 2018 and 2019. This time, the agency is seeking federal court intervention to compel Musk to testify about his takeover of Twitter.
However, Musk and Cuban remain steadfast in their stance. They are calling on judges to support the Fifth Circuit’s ruling. Their lawyers argue that choosing administrative proceedings over federal jury trials contradicts the SEC’s mission. Moreover, such choices could be detrimental to investors and the market that the SEC is committed to protecting.