George Jarkesy vs the SEC: A Battle Over Authority

George Jarkesy's battle with the SEC was a high-stakes fight over authority. He was a registered investment advisor with a successful track record, but the SEC saw him as a threat to their power.

The SEC accused Jarkesy of misrepresenting his investment advisory business, but he claimed they were trying to silence him. He had been a vocal critic of the SEC's rules and regulations, which he believed were stifling innovation in the financial industry.

Jarkesy's case was a test of the SEC's authority to regulate investment advisors. He argued that the SEC's rules were overly broad and gave too much power to the agency.

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George Jarkesy started his career in the mid-1990s in the financial services industry with a New York Stock Exchange member.

Over the past two decades, he has originated and/or participated in several hundred investments in various sectors, including financial consulting, media, real estate, and technology.

Jarkesy has also founded, invested in, and helped to build companies across a broad range of industry sectors, demonstrating his entrepreneurial spirit and business acumen.

As a seasoned investor and financial advisor, he has been a regular guest on various TV shows, including the Neil Cavuto show and CNBC's Worldwide Exchange.

Jarkesy's experience as an entrepreneur, investor, and businessman has given him a unique perspective on the economy, markets, and politics, which he shares on his nationally syndicated radio show.

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George Jarkesy is a prolific writer, having penned numerous columns for various publications.

He's written for TownHall.com, BusinessInsider.com, and TownHallFinance.org, among others.

Jarkesy's writing often focuses on financial and economic issues, with a strong opinion on the economic policies of former-President Obama.

His columns frequently express a critical view of Obama's administration, highlighting the perceived negative impact on the economy.

Some of his notable columns include "Global Warming" RIP and Marx and Marshall Would Be Proud Of Obama's Attack On Religion.

Jarkesy has also written for Glenn Beck's The Blaze and EconIntersect.com, further demonstrating his range as a columnist.

His writing has been widely read and respected, with few others in the media matching his level of outspokenness on economic issues.

Jarkesy's column "Taxapalooza" is another example of his in-depth analysis of economic topics.

His ability to break down complex issues into clear, understandable language has made him a trusted voice in the financial and economic community.

George Jarkesy has a strong presence in the media, and his radio show is a great example of this. The George Jarkesy Radio show regularly appears on CNBC's Worldwide Exchange and Fox Business.

Launched in 2012, the show is a nationally syndicated radio program on the Wall Street Radio Network owned by Salem Media. The show debuted on January 9, 2012, in five markets nationwide.

The George Jarkesy Radio Show initially aired in Houston, Atlanta, Orlando, Boston, and Sacramento. The show's mix of politics and business provides valuable insights for listeners.

The show has expanded its reach over time, with the addition of KYCR AM 1570 in Minneapolis/St. Paul, Minnesota on May 7, 2012. This affiliate is part of the Wall Street Business Network.

The show also added KVCE AM 1160 in the Dallas/Fort Worth area in June 2012. This expansion has helped bring the show's unique perspective to an even wider audience.

Guests on the show have included notable figures such as Congressman Kevin Brady, Congressman Randy Weber, Senator Chuck Schumer, Charlie Daniels, Dr. Thomas Sowell, and Senator Doctor Tom Coburn.

George Jarkesy has been involved in several high-profile legal issues, particularly with the Securities and Exchange Commission (SEC).

He was charged with civil charges of fraud by the SEC on March 22, 2013, for allegedly defrauding investors in two hedge funds.

Jarkesy and Thomas Belesis of John Thomas Financial were accused of misrepresenting investment strategies, lying about the identity of the funds' auditor and prime broker, and inflating the funds' claimed value to collect larger management fees.

The SEC initiated an enforcement action in-house before an administrative law judge, which led to a final order in 2020 that levied a civil penalty of $300,000 against Jarkesy and Patriot28, LLC, and prohibited Jarkesy from participating in the securities industry and in offerings of penny stocks.

The U.S. Supreme Court ultimately ruled in favor of Jarkesy, holding that the Seventh Amendment entitles a defendant to a jury trial when the SEC seeks civil penalties for securities fraud.

George Jarkesy was charged with civil charges of fraud by the SEC on March 22, 2013. The charges accused Jarkesy and Thomas Belesis of John Thomas Financial of defrauding investors in two hedge funds.

The complaint alleged that Jarkesy told investors he was the fund manager, when in fact Belesis made many of the decisions. Investors were also misled into thinking the funds were audited by KPMG when they weren't.

Jarkesy responded to the charges by suing the SEC, claiming it didn't have the authority to impose fines on him. The U.S. Fifth Circuit Court of Appeals sided with Jarkesy, ruling that the use of internal hearings before an administrative law judge was a violation of the Seventh Amendment.

The U.S. Supreme Court agreed to review the opinion from the Fifth Circuit and heard arguments on the matter on November 29, 2023. On June 27, 2024, the U.S. Supreme Court ruled in agreement with the Fifth Circuit, holding that the Seventh Amendment entitles a defendant to a jury trial when the SEC seeks civil penalties for securities fraud.

Jarkesy and Thomas Belesis were accused of defrauding investors by misrepresenting investment strategies, lying about the funds' auditor and prime broker, and inflating the funds' claimed value to collect larger management fees.

Federal agency authority is facing significant challenges. The Jarkesy decision has already started to cause shockwaves across the administrative and regulatory landscape.

The full extent of the effects of the Jarkesy decision remains to be seen, but further litigation against the SEC and other federal government agencies is sure to follow. This means that the rules and regulations enforced by these agencies will likely be subject to ongoing scrutiny and potential changes.

The Supreme Court decided in favor of George Jarkesy, ruling that the Seventh Amendment entitles a defendant to a jury trial when the Securities and Exchange Commission seeks civil penalties for securities fraud.

The Court's decision was a significant victory for Jarkesy, who had been investigated by the SEC for securities fraud related to the launch of two investment funds. The SEC had initiated an enforcement action in-house before an administrative law judge, but the Court ruled that this was not sufficient.

The Court's decision was based on the fact that the claims at issue implicated the Seventh Amendment because of their close relationship to traditional legal claims, specifically, common law fraud. This meant that Jarkesy was entitled to a jury trial unless the "public rights" exception applied.

The public rights exception did not apply in this case, as the action did not fall within any of the distinctive areas involving governmental prerogatives where the Court had concluded that a matter might be resolved outside of an Article III court without a jury. The Court also noted that Congress could not eliminate the Seventh Amendment right by legislating that traditional legal claims be heard by an administrative tribunal.

The Court's decision was a significant rebuke to the SEC's efforts to impose civil penalties through in-house proceedings. In fact, the Court stated that the SEC's antifraud provisions replicate common law fraud, and it is well established that common law claims must be heard by a jury.