What Jarkesy And Other Recent Landmark U.S. Supreme Court Rulings Mean For The Private Funds Industry

The U.S. Supreme Court's recent 6‑3 ruling in SEC v. Jarkesy eliminated the SEC's ability to use contested administrative proceedings to seek civil monetary penalties for anti-fraud violations of the securities laws. However, Jarkesy is only one of several landmark rulings handed down by the U.S. Supreme Court this term. Most notably, the Court's ruling in Loper Bright Enterprises v. Raimondo overturned the principle that federal courts must defer to an agency's interpretation of a statute if it is silent or ambiguous, known as Chevron deference. When considered together, Jarkesy and Loper Bright could dramatically reshape the path forward for private fund managers facing an aggressive SEC rulemaking and enforcement agenda. In fact, some could argue that the Court is all but inviting challenges to SEC rulemaking and other administrative actions in federal courts, which could chip away at the administrative state. At minimum, the private funds industry now faces a far more level playing field, with new tools to challenge the SEC's authority or, at the very least, to leverage when attempting to settle actions on more favorable terms. In a guest article, Arnold & Porter partners Veronica E. Callahan, Daniel M. Hawke and Christian D.H. Schultz examine the repercussions of the recent Supreme Court rulings by summarizing the procedural history of Jarkesy; offering an overview of the decision; and analyzing what Jarkesy, Loper Bright and other recent legal decisions mean for the private funds industry going forward. See "Forecasting Potential Outcomes in SEC v. Jarkesy Based on Recent Oral Arguments" (Feb. 22, 2024).