The Supreme Court just took a big step to rein in the deep state

The U.S. Supreme Court had one of its better rulings of the term Thursday when it struck down the Securities and Exchange Commission's ability to punish people without a jury trial.

The ruling in SEC v. Jarkesy is significant in many ways, but especially because it will significantly curtail the federal government's ability to hand out civil penalties through administrative courts that operate differently from criminal and civil courts.

Under existing federal law, the SEC has the authority to enforce securities fraud. But instead of filing charges or a lawsuit in federal court, the agency has the option of using its own in-house court that adjudicates these claims and then levies a punishment, usually in the form of a fine. It effectively allows the SEC to serve as investigator, prosecutor, judge, jury, and executioner.

Enter George Jarkesy Jr., who was fined $300,000 by the SEC's in-house court for committing securities fraud. Jarkesy argued that he was entitled to a jury trial and that the power the SEC had to independently levy harsh fines violated the Constitution's Seventh Amendment, which says, "In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved."

The Supreme Court, in a 6-3 ruling along ideological lines, agreed with Jarkesy, ruling that whenever the SEC wishes to levy a civil penalty for securities fraud, "the Seventh Amendment entitles the defendant to a jury trial."

"The civil penalties in this case are designed to punish and deter," Chief Justice John Roberts wrote in his majority opinion. "They are therefore 'a type of remedy at common law that could only be enforced in courts of law.' That conclusion effectively decides that this suit implicates the Seventh Amendment right and that a defendant would be entitled to a jury on these claims."

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The ruling is significant in that it poses a direct threat to government agencies that levy fines and other civil punishments without going through the usual federal court system. Roberts was careful in his ruling to say that it applied only to the SEC, but the concern he identified with the agency's enforcement mechanisms is one that is present in many agencies across the federal government.

Whether the precedent the court established in its ruling indicates a broader skepticism toward penalties imposed without a jury trial remains to be seen. But regardless of its limitations, the ruling is still a big step toward restoring due process rights for those facing the unaccountable iron fist of the deep state.