Musk, Cuban jointly submit amicus brief to court, condemning SEC's evasion of jury system

Tesla founder Elon Musk, Mark Cuban, and several other entrepreneurs jointly submitted a friend of the court brief, emphasizing concerns about the constitutionality of trials conducted by the SEC without a jury system, which could lead to completely different litigation outcomes for the defendants.

SEC Rejects Jury System

The document points out that the SEC typically relies on administrative law judges appointed by a committee of 5, rather than a jury system.

The SEC also emphasizes that the jury system delays the efficiency of their enforcement actions and is deemed "unnecessary." Especially in situations where urgent asset freezes are needed, they cannot afford to wait for the time-consuming jury process, citing that this could be more detrimental to investors and financial markets.

However, the document also mentions that the SEC seems somewhat inconsistent in its use of the jury system, only deeming a jury trial meaningful in uncontroversial, clear-cut cases.

SEC Only Utilizes Jury in Favorable Situations?

The document references the 2004 SEC lawsuit against Seghers, where the SEC accused its hedge fund of violating the 1940 Investment Advisers Act. The jury in that case found that Seghers had overstated the value of investors' interests in the fund, involving fraud.

And if the SEC believes that the defendant's actions do not involve excessive civil implications, they will proceed with enforcement actions and exclude the jury process.

Request for SEC to Amend Litigation Procedures

Attorney Alex Spiro, representing Musk, pointed out in the letter:

The SEC acts as the sole fact-finder in the litigation process, confirming the defendant's liability and penalties without jury involvement, which violates the U.S. due process protections for litigation parties.

In short, this equates to a single regulatory body assuming the roles of judge, jury, and executor.

Note: Courts typically allow amicus curiae to submit briefs in cases. While the advice may not always be adopted, it helps promote fair hearings, providing judges with perspectives and information not previously considered.