The context of the legal challenge centers around the SEC vs. Jarkesy case, in which George Jarkesy contends that his Seventh Amendment rights were violated.

Elon Musk, Mark Cuban team up to contest SEC trial strategies

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Elon Musk, Mark Cuban and others have collaboratively submitted a shared amicus brief to the Supreme Court of the United States to raise concerns about the U.S. Securities and Exchange Commission’s (SEC) approach to conducting internal proceedings without the inclusion of juries.

Mark Cuban, a billionaire crypto investor and supporter of decentralized finance (DeFi) who works in the cryptocurrency space, and Elon Musk, the CEO of Tesla and SpaceX who recently changed Twitter’s name to X and is controversial in the crypto space, both say that these administrative proceedings have different outcomes for people who are facing SEC charges. Consequently, this approach has raised concerns about the potential infringement of the U.S. Constitution’s Seventh Amendment right to a jury trial.

The context of this legal challenge centers around the SEC vs. Jarkesy case. George Jarkesy contends that his Seventh Amendment rights were violated in this specific case. He argues that the SEC’s internal adjudication process, which lacks a jury and is overseen by an administrative law judge appointed by the commission, contradicts these rights. This effectively results in a single entity fulfilling the roles of judge, jury and enforcer.

Screenshot of the amicus brief. Source: ICAN Law

Musk, Cuban and other amici curiae highlight a shift in the SEC’s approach between 2013 and 2014. They observed that the SEC started handling more cases internally rather than through federal courts. This change occurred after a string of unsuccessful insider trading cases were tried before juries.

Musk is facing his third notable legal dispute with the financial regulatory agency. This comes in the wake of prior lawsuits in 2018 and 2019. There is currently an effort by the regulatory body to get a federal court to ask Musk to testify about his purchase of Twitter, specifically about what he said in public about the deal, as shown in legal records.

Still, the amici curiae have not changed their minds. They say that choosing administrative proceedings over federal court juries goes against the SEC’s stated mission. Furthermore, such decisions could potentially negatively impact investors and the markets the SEC is committed to protecting.