SCOTUS decision upends in-house tribunals in SEC fraud cases

The Supreme Court of the United States (SCOTUS) ruled that the Securities and Exchange Commission’s (SEC) practice of using in-house tribunals overseen by an administrative judge to adjudicate securities fraud cases is unconstitutional.

In a 6-3 decision, issued Thursday, SCOTUS ordered the SEC to file complaints involving securities fraud in federal court. The ruling effectively strips away an alternative venue considered to be a home-court advantage by critics of the agency. 

The court’s majority, led by Chief Justice John Roberts, wrote, “A defendant facing a fraud suit has the right to be tried by a jury of his peers before a neutral adjudicator.” 

The minority opinion, written by Justice Sonia Sotomayor, argued the court was reversing longstanding precedent, cutting back on the authority of administrative agencies.