Bloomberg Law• Apr 23, 2026• 30:41Interview

SCOTUS Unlikely to Curb SEC Remedy & Judge Rebukes RFK Jr | Bloomberg Law

From Bloomberg Law

James Park•Professor, UCLA Law School

Executive Summary

The Supreme Court is reviewing the SEC's disgorgement power, a key enforcement tool, debating whether the agency must prove specific economic harm to victims, with most justices appearing skeptical of imposing such a requirement.
Justice Gorsuch raised concerns about defendants' Seventh Amendment right to a jury trial in SEC cases where disgorged funds are not returned to victims, linking the issue to the recent Jarkesy precedent.
A federal judge issued a broad injunction blocking the Department of Health and Human Services (HHS) from withholding funds for gender-affirming care, ruling the action was an unlawful overreach of executive authority.
The legal battles highlight ongoing tensions between executive agency power, congressional statutes, and judicial review in both financial regulation and healthcare policy, with significant implications for regulated industries.

12 quotes

Concerns Raised

Potential for the Supreme Court to curtail SEC disgorgement powers, making it harder to prosecute complex financial fraud.
The 'chilling effect' of executive branch threats on healthcare providers, which may persist even after favorable court rulings.
A growing trend of applying jury trial rights to administrative enforcement, potentially complicating and slowing regulatory actions.
Executive overreach in using federal funding to dictate healthcare policy without proper rulemaking.

Opportunities Identified

Supreme Court clarity on the scope of SEC disgorgement could solidify the agency's enforcement framework.
Judicial rulings that reinforce the Administrative Procedure Act can provide stability for businesses against arbitrary executive actions.

Key Themes

The Scope of SEC Enforcement Power

The Supreme Court is scrutinizing the SEC's ability to use disgorgement, a tool responsible for recovering billions in illicit profits. The central debate is whether this remedy requires proof of direct economic harm to victims, a standard that could significantly hamper enforcement in complex fraud cases like market manipulation or insider trading.

This case could redefine the SEC's enforcement capabilities, potentially weakening its ability to deter financial misconduct and recover ill-gotten gains where individual victims are difficult to identify.

Judicial Checks on Executive Authority

The episode contrasts two instances of judicial oversight: the Supreme Court interpreting a power Congress explicitly granted the SEC, and a federal court striking down an HHS action for circumventing established legal processes. Both cases demonstrate the judiciary's role in defining the boundaries of administrative power.

These rulings affirm the critical role of courts in checking executive power and interpreting legislative intent, which provides a measure of predictability for businesses and organizations operating under federal regulation.

Expansion of Constitutional Rights in Administrative Law

Justice Gorsuch's questioning connects the SEC's disgorgement practices to the Seventh Amendment right to a jury trial, building on the recent SEC v. Jarkesy precedent. This reflects a growing judicial trend of applying constitutional protections, traditionally reserved for common-law cases, to administrative enforcement actions.

This trend could fundamentally alter how regulatory agencies conduct enforcement, potentially making proceedings more complex, lengthy, and subject to the unpredictability of jury trials, thereby increasing litigation risk for agencies.

Executive Action and Healthcare Policy

A federal court blocked the HHS Secretary's attempt to defund hospitals providing gender-affirming care, citing a lack of legal authority and procedural violations. The judge's broad injunction aims to prevent the administration from using similar tactics to achieve its policy goals without following the Administrative Procedure Act.

This conflict illustrates the use of federal funding as a powerful tool to influence healthcare practices and the legal guardrails that exist to challenge executive actions perceived as overstepping statutory authority.

The Chilling Effect of Regulatory Threats

The discussion notes that the threat of federal action from HHS has already led some hospitals to cease providing certain medical services, regardless of the action's ultimate legality. This demonstrates how administrative pronouncements can influence market behavior before legal challenges are resolved.

This highlights the significant real-world impact of regulatory uncertainty and political pressure on healthcare operations, which can alter the availability of services and create risk for providers even without a formal rule change.

Get started free

Topics

SEC Supreme Court Disgorgement Administrative Law Financial Regulation Securities Fraud Penny Stocks Seventh Amendment Jury Trials HHS Gender-Affirming Care Healthcare Policy Federal Funding Judicial Review Executive Power

Processed Apr 23, 2026 yt-dlp + mlx-whisper + Gemini