[citation needed][2][3] First, the enforcement of Dodd Frank's civil penalties for securities fraud in the SEC's administrative proceedings violated the Seventh Amendment's guarantee of a jury trial because (a) the case involved traditional common law claims (fraud), (b) civil penalties are a legal remedy to which the Seventh Amendment attaches, thus (c) the claims are not a matter of public rights that can be adjudicated in administrative proceedings on the mere basis the government is the plaintiff;[4][5] Second, under the first clause of Article I, where "All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives," Dodd Frank's broad grant of unfettered discretion to the SEC to choose between enforcing identical claims in either federal district court or its own administrative tribunal violated the nondelegation doctrine because (a) the assignment of claims to a non-Article III tribunal is an Article I power, and (b) Congress provided—as the SEC conceded[6][5]—no intelligible principle to the SEC.

[7][8][5] The United States Supreme Court issued its decision in June 2024, and in a 6-3 opinion, ruled that those charged with civil penalties by the SEC have the right to a jury trial, under the Seventh Amendment, but did not consider the other questions raised.

In response to the Great Recession,[11] Congress purported to empower[12] the SEC to impose harsh civil penalties[13] against any[9] private citizen through its own administrative adjudications with only limited, after-the-fact review by a federal court of appeals.

[18] Under Dodd-Frank's new provisions, after an investigation, the SEC opted to use internal proceedings rather than a jury trial to evaluate its claims against Jarkesy and Patriot28.

[27][22][21][26] Five years after the SEC initiated the enforcement action against Jarkesy, the Supreme Court of the United States held in Lucia v. Securities and Exchange Commission in 2018 that the SEC's ALJs are inferior officers of the Executive Branch subject to the Appointments Clause of Article II of the United States Constitution and must be appointed by the President or a delegated officer.

§ 554(d) of the Administrative Procedure Act (APA), these memoranda are supposed to be kept confidential within divisions to keep adjudicative, investigative and prosecutorial staff separated.

[25] The attorney for Jarkesy is S. Michael McColloch, while Daniel J. Aguilar of the Civil Division of the Department of Justice argued for the SEC.

[42][6] The Supreme Court had already granted certiorari to Axon Enterprise, Inc. v. Federal Trade Commission and SEC v. Cochran for the 2022–23 term, which address whether defendants in administrative proceedings can challenge in district court the constitutionality of ALJs within the Federal Trade Commission and the SEC before final agency action.

[49][50] Therefore, civil penalties as punishment, such as those imposed by the SEC, were a type of common law remedy enforceable by the courts as they were 'legal in nature' and permitted the right to a jury trial.

When Congress creates a public right enforced by the federal government, it can "assign the matter for decision to an agency without a jury, consistent with the Seventh Amendment."

[7] Since Jarkesy, at least three lawsuits have been filed claiming that the United States Department of Labor's administrative proceedings for enforcing anti-discrimination requirements for federal contractors are unconstitutional.