The Supreme Court’s recent opinion in Securities and Exchange Commission v. Jarkesy is a win for the Seventh Amendment to the U.S. Constitution and, by extension, consumer choice. It’s like Independence Day all over again!
The Seventh Amendment, which established the American people’s right to a trial by jury, represents the bedrock of the checks and balances that make this democratic republic hum.
Involving ordinary citizens from diverse backgrounds, jury trials put the thoughts and will of the people at center stage. When serving on a jury, community members are afforded the opportunity to stop the government from enforcing counterproductive, unconstitutional laws and restrain it from going after innocent Americans when it’s not meeting the high-bar burden of proof demanded of the U.S. judicial system. In doing so, they protect consumer choice and the life, liberty, and pursuit of happiness of all those around them.
However, the SEC (like many government agencies) has “worked around” the Seventh Amendment. It’s done so by utilizing internal administrative law judges to enforce its decisions instead of juries.
The agencies in question personally hire these hand-picked ALJs, which do not receive congressional appointment from the People’s Branch or confirmation from the president. They are effectively employees of the agency itself with no accountability or oversight, and they have every incentive to do the bidding of the regulators who crowned them.
That’s precisely what the Supreme Court challenged in its Jarkesy opinion. To quote the Court directly: “When it comes to the separation of powers, this Court tells the American public and its coordinate branches that it knows best.”
As the president of a 501c3 consumer advocacy organization, to that I say “Amen.”
Jarkesy won’t just restrain the SEC. As countless legal scholars have pointed out, it will also stop dozens of other agencies from short-circuiting the American people’s right to challenge their government.
As consumer watchdogs, we at the American Consumer Institute are especially excited about how this decision will force America’s top consumer protection arm — the Federal Trade Commission (FTC) — to clean up its act.
While the FTC’s role of protecting consumers and marketplace competition is important, the agency’s lane is narrowly defined. It’s only supposed to enforce Congress’ existing laws which play a vitally important role in protecting consumers and the competitive process. However, its role is supposed to be limited to the enforcement of Congress’ existing laws.
Don’t tell that to FTC. It’s been making its own rules, using ALJs to finalize much of its dirty work for years.
Three years ago, the FTC even went so far as to rescind the Consumer Welfare Standard (CWS), the operational principle that ensured that the FTC base all its actions on just one litmus test: will consumers receive harm if we don’t act? Scrapping the CWS gave the agency unfettered ability to attack some of the American people’s favorite companies for ideological reasons – even when the outcome would be significantly worse for consumers.
Instead of focusing exclusively on whether anti-competitive, anti-free market activity exists, it began challenging private businesses for other considerations, such as how big they are. Consumer prices have increased, and marketplace choice has decreased as a result.
Agencies like the SEC and FTC acting in this manner is ridiculous and wrongheaded, but thanks to Jarkesy, this problem’s prevalence will dramatically shrink in size and scope in short order. We thank the justices for standing up for the Constitution and can’t wait to watch consumers reap the benefits.
As Independence Day approaches, this is a great example of how liberty prevails.