SEC Draws Criticism from Musk and Cuban Over Lack of Juries in Proceedings
Musk and Cuban challenge SEC's no-jury internal procedures, highlighting potential Seventh Amendment breaches.
Thu, 19 Oct 2023, 23:28 pm UTC
Elon Musk, the driving force behind companies like Tesla and SpaceX, alongside Mark Cuban, known for his crypto investments, recently approached the U.S. Supreme Court. They voiced concerns over the Securities and Exchange Commission (SEC) and its preference for internal adjudications that don't involve juries.
Cuban, deeply embedded in the cryptocurrency domain, and Musk, who not long ago reshaped Twitter's dynamics, are united in their criticism. Their contention is that the SEC's current methodology can potentially lead to inconsistent outcomes for those under its scrutiny. More gravely, the duo feels that this method may trample upon the Seventh Amendment, which guarantees an individual's right to a jury trial.
Their stance finds roots in a particular case: SEC vs. Jarkesy. In this case, George Jarkesy claims a breach of his Seventh Amendment rights. He holds that the SEC's procedure, sans a jury and supervised by a judge from the commission itself, goes against these rights. The system, he feels, conflates the roles of decision-maker, evaluator, and enforcer.
A change in the SEC's modus operandi became evident to Cuban and Musk between 2013 and 2014. The duo noticed the SEC leaning more towards handling issues in-house rather than navigating them through federal courts. This shift was likely a reaction to a series of insider trading cases that didn't fare well before jury trials.
It's noteworthy that Musk isn't a stranger to the SEC's scrutiny. Following legal tussles in 2018 and 2019, he's once again under the lens. The focus now is on his takeover of Twitter, especially the public declarations he made concerning the deal, as revealed in judicial documents.
Despite the challenges, both Cuban and Musk remain unyielding. They hope for a nod from the justices supporting the 5th Circuit's decision.
Through their attorneys, they argue that bypassing federal court juries undermines the SEC's foundational goals. Decisions borne from such a system could potentially jeopardize investors and the very markets the SEC aims to shield.
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