Two landmark decisions that reshape securities enforcement.
SEC v. Jarkesy, 144 S. Ct. 2117 (2024).
The Supreme Court held that the Seventh Amendment right to a jury trial applies when the SEC seeks civil penalties in administrative fraud proceedings. The government cannot use its own in-house tribunal to impose penalties for fraud without giving the accused the right to a jury.
FINRA’s proceeding against Fernandez had no jury. The charges involved alleged fraud. Three lifetime bars were imposed. Under Jarkesy, the question is whether this proceeding should have included the protections the Constitution requires.
On August 26, 2024, Fernandez moved for supplemental briefing to address Jarkesy. The SEC granted the motion on October 25, 2024 (Release No. 34-101438). Fernandez filed his supplemental constitutional brief on November 11, 2024.
Alpine Securities v. FINRA, No. 23-5129 (D.C. Cir. Nov. 22, 2024).
The D.C. Circuit held that FINRA cannot impose bars that take effect before the SEC has completed its merits review. The court applied the private nondelegation doctrine. It found that allowing FINRA to enforce sanctions during the review period exceeds the bounds of properly delegated authority.
Fernandez has been barred from the securities industry since FINRA’s NAC decision in September 2021. The SEC has not completed its merits review. Under Alpine, FINRA’s bars should not be in effect during this period.
There is one more reason this case is stronger than Alpine. Federal law requires all equity crowdfunding portals to be FINRA members. There is no other option. No alternative license exists. No competing organization qualifies. Under 15 U.S.C. § 78o(a)(5) and 17 C.F.R. § 227.303, FINRA membership is the only legal path to operate a funding portal in the United States.
The D.C. Circuit has described a lifetime bar as “the securities industry equivalent of capital punishment.” PAZ Securities, Inc. v. SEC, 566 F.3d 1172, 1176 (D.C. Cir. 2009). Capital punishment is reserved for the most serious conduct. The Commission is required under 15 U.S.C. § 78s(e)(2) to set aside sanctions that are excessive or oppressive. The record in this case shows zero documented investor financial loss, no restitution ordered at any stage, sixteen months of operation, and a combined total of $15,000 raised across all closed offerings. The NAC imposed $15,889.03 in hearing and appeal costs — a monetary amount exceeding DreamFunded’s entire raise history. Three separate lifetime bars for a first-time operator at a startup funding portal under newly enacted and untested rules, where no investor lost a dollar, is not proportionate by any standard the D.C. Circuit has applied.
In Smith v. SEC, No. 24-3907 (6th Cir. Mar. 27, 2026), the Sixth Circuit declined to consider a Seventh Amendment jury trial challenge because the petitioner had failed to raise it before the SEC while the case was still pending. The court held that the proper mechanism for preservation was a motion for supplemental briefing under 17 C.F.R. § 201.421(b) while Commission review remained open. Without that preservation step, the constitutional argument was forfeited. The court noted, however, that had the petitioner properly preserved the issue, “he may well have been entitled to a jury trial in federal court.” Smith, slip op. at 14. Fernandez took precisely the preservation step Smith failed to take. He moved for supplemental briefing on the Jarkesy constitutional questions while his case remained pending. The Commission granted that motion on October 25, 2024, Exchange Act Release No. 34-101438. Fernandez’s supplemental brief was filed November 11, 2024. FINRA responded December 20, 2024. The argument is fully preserved.
Together, Jarkesy and Alpine represent a fundamental shift in how courts view securities enforcement. These are not minor procedural adjustments. They are constitutional holdings that redefine the limits of administrative power.
Jarkesy says you have a right to a jury when facing fraud charges. Alpine says you cannot be punished before your case is fully reviewed. One protects the right to a fair trial. The other protects against premature punishment.
For Fernandez, these decisions arrived while his case sat waiting. The SEC has acknowledged their relevance by granting supplemental briefing. But 1,329 days after briefing closed, no decision has been issued.