In a Monday op-ed for The Atlantic, New York University law professor Noah Rosenblum admonished the United States Supreme Court to smack down an "antidemocratic ploy" that could ultimately "destroy" the federal government.
A conservative Fifth Circuit Court of Appeals used what Rosenbaum calls "fake history" to rule against the Securities and Exchange Commission (SEC) in favor of right-wing activist and radio show host George R. Jarkesy Jr.
Leading to what the law professor deems "the most direct challenge yet to the legitimacy of the modern federal government," Jarkesy "ran a pair of investment funds with $24 million in assets. But he misrepresented how the funds were run, paid himself and his partner exorbitant fees, and inflated the assets' value."
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When "the SEC fined him several hundred thousand dollars and prohibited him from working in some parts of the securities industry," he didn't only "contest the SEC's ruling; he alleged that the SEC's entire process against him was unconstitutional."
According to Rosenblum, the Fifth Circuit court's agreement with Jarkesy "was so extreme that Judge W. Eugene Davis, twice appointed by Republican presidents—and elevated to the appeals court by Ronald Reagan—dissented vigorously."
The NYU professor notes, "The right-wing legal movement’s target is the 'administrative state'—the agencies and institutions that set standards for safety in the workplace, limit environmental hazards and damage, and impose rules on financial markets to ensure their stability and basic fairness, among many other important things," and this case "threatens all of that."
Rosenblum writes:
Were Jarkesy to win, he would help achieve what the conservative legal movement's members have long dreamed of: the destruction of the New Deal. The SEC, Jarkesy's target, is not just the most important regulator of the financial markets, it is also one of the crown jewels of the New Deal agencies. Republicans have had it in their crosshairs for nearly a century.
The consequences of Jarkesy’s success would be disastrous, especially for the American economy. The SEC enforces the basic rules that make stock markets work. Without it, stock issuers and dealers would lie—with disastrous results. One needs only to examine the rampant fraud, contagion, and meltdown in crypto markets last year to see what an unregulated securities market looks like.
More generally, if Congress cannot delegate to agencies, it cannot govern. Congress could never and has never written rules specific enough to anticipate all eventualities. This is why Congress delegated power to the SEC in the first place.
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The high court is set to hear Securities and Exchange Commission v. Jarkesy on Wednesday, November 29.
Rosenblum's full op-ed is here (subscription required).
