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.
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.
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.
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.
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.
Keep pulling the thread on James Park.