Matthias O’Meara is a municipal-securities advisor who specializes in bond issuances for charter schools. Formerly employed by a bank, he was eager to establish a new business.
Despite receiving zero complaints from O’Meara’s clients and alleging zero investor loss, the SEC sued O’Meara and his firm, Choice Advisors, LLC, for advising two clients without completing registration paperwork with the SEC. A court agreed with the SEC, ordered disgorgement, imposed civil penalties, and enjoined O’Meara and Choice from violating the law.
The SEC could have asked the court for another penalty—lifetime industry bans, the so-called career death penalty. But instead, the SEC decided to consider that penalty in-house through its own home-court tribunal. The SEC should not be allowed two bites at the penalty apple. Nor should it be able to divide its cases between federal courts and its in-house tribunal.
O’Meara and Choice Advisors fought back. They filed a federal lawsuit to stop the SEC’s unfair and unconstitutional practices. O’Meara and Choice Advisors argue that the SEC’s in-house proceeding violates their rights to a hearing before an independent judge and jury, and their rights to due process of law.
The right to earn a living in a lawful industry is a fundamental right. And the Constitution ensures that before the government may restrict private rights, it must proceed in independent, Article III courts with a jury when necessary.
Article III delegates the federal government’s judicial power to independent courts, whose judges enjoy lifetime appointments (with good behavior) and guaranteed salaries—so that the judges will not be beholden to the other two branches. And the Seventh Amendment guarantees that common law claims are heard by juries.
The SEC here—like many agencies across the government—is violating Article III and the Seventh Amendment.
With the help of Pacific Legal Foundation, Matthias O’Meara and Choice Advisors appealed their case to the Tenth Circuit Court of Appeals, alleging that the Securities and Exchange Commission violated their right to a fair and independent judicial proceeding, a jury trial, and due process. The SEC lacks authority to double-dip by prosecuting alleged violators in federal court and in its own agency tribunals.
What’s At Stake?
- Everyone deserves a fair hearing before an independent judge and jury. All Americans are entitled to a neutral judge and jury when the government seeks to infringe on their private rights.
- The Constitution protects the right to a jury trial, preserving justice and ensuring that the people have a voice in government proceedings; when that right is restricted, justice is denied.
- Administrative agencies like the SEC do not have the power to double-dip by prosecuting cases in both federal court and their own agency tribunals.
