Elon Musk and Mark Cuban spoke out against SEC

American entrepreneurs, including Elon Musk, Philip Goldstein, and Mark Cuban, have filed an amicus curiae brief in the US Securities and Exchange Commission (SEC) case against George Jarkesy Jr.

Their appeal to the Supreme Court stated the following:

“The SEC’s insistence on administrative proceedings when federal court juries are readily available runs contrary to the SEC’s mission and harms the very investors and markets the SEC is charged with protecting.”

Court filing

According to the authors, the current mechanism for reviewing administrative cases gives the SEC an “undue advantage” over defendants.

According to court records, Jarkesy created two hedge funds worth $24 million in 2007 and 2009. He invested primarily in small businesses. The investment consultant was Patriot28.

The SEC later charged Jarkesy and the firm mentioned above with defrauding investors. In 2013, the regulator assigned a review to its judge based on the Dodd-Frank Act and ordered the entrepreneur to pay a fine.

Jarkesi filed a protest demanding a review of the case. He said the SEC’s actions violated the Seventh Amendment (right to trial by jury).

In 2020, after several proceedings, the commission upheld the verdict. Later, the department admitted that they had “illegal access” to the materials of a dozen cases, including the case of Jarkesy.

In May 2022, given new details in the case, the U.S. Court of Appeals for the Fifth Circuit ruled in favor of Jarkesy. It restored his seventh amendment rights. The US Department of Justice filed an appeal against this decision. The Supreme Court is expected to hear it in November 2023.