The SEC took Jarkesy’s case into administrative proceedings, meaning it was heard by what are known as administrative-law judges instead of a regular federal court. They function as in-house adjudicators for certain regulatory cases. While they have many of the powers and privileges of normal federal judges, they are neither nominated by the president nor confirmed by the Senate. Many agencies rely on administrative law judges in some capacity to carry out their congressionally-mandated functions, most notably in the immigration sphere.
The administrative law judge ruled in the agency’s favor, imposing civil sanctions on Jarkesy, including various restrictions on his ability to participate in the securities industry and a $300,000 civil penalty. Jarkesy challenged the SEC’s ability to levy those penalties on constitutional grounds. The Fifth Circuit Court of Appeals, which is always up for some mischief these days, sided with him in an expansive decision on how federal agencies can enforce their rules.
As a result, the Supreme Court took up three questions in Jarkesy. One was whether Congress violated the Constitution’s separation of powers by creating administrative law judges with for-cause firing protections. While most political appointees in the federal government serve at the president’s pleasure, Congress has also established that some can’t be fired by a president without cause.