NCLA to Supreme Court: Courts, Not Bureaucrats, Must Decide Jury-Trial Rights

Eric S. Smith v. U.S. Securities and Exchange Commission and Financial Industry Regulatory Authority, Inc.

Washington, DC, Oct. 14, 2026 (GLOBE NEWSWIRE) -- The New Civil Liberties Alliance petitioned the U.S. Supreme Court today to hear Eric S. Smith v. U.S. Securities and Exchange Commission and Financial Industry Regulatory Authority, an important case in defense of jury trial rights. NCLA asks the Justices to rule that federal courts should decide claims challenging the structural constitutionality of in-house agency enforcement proceedings, even when the targets of those proceedings have not first presented their claims to the agency for consideration.

FINRA imposed punitive sanctions on NCLA client Eric S. Smith and SEC upheld them—all administratively without any Article III jury trial. SEC’s 2024 decision upholding the sanctions defied the Supreme Court’s ruling weeks earlier in SEC v. Jarkesy that targets of administrative proceedings brought by federal agencies have a Seventh Amendment right to a jury trial in cases seeking civil penalties. The U.S. Court of Appeals for the Sixth Circuit later acknowledged that SEC likely violated Smith’s Seventh Amendment right to a jury trial in an Article III court. But the court misconstrued a provision of the Securities Exchange Act as stripping the court of any power to address or remedy that constitutional violation, solely because Smith did not first complain to SEC about it.

NCLA points out that only Article III courts—not SEC—have the competence, expertise, and authority under the Constitution to adjudicate Smith’s constitutional arguments, so he had no obligation or reason to seek SEC’s advisory opinion on the Constitution before seeking judicial relief. The Sixth Circuit’s ruling conflicts with precedent, including the Supreme Court’s 2023 decision in NCLA’s SEC v. Cochran case, and Third and Ninth Circuit decisions holding that agency enforcement targets may take constitutional claims against their enforcement proceedings to court without first presenting them to the agency.

NCLA is deeply grateful to Gregory C. Garre, Roman Martinez, and their team at Latham & Watkins for their generous assistance in the preparation of this important petition.

NCLA released the following statements:

“Just weeks after the Supreme Court’s SEC v. Jarkesy decision told SEC it cannot use in-house, juryless proceedings to punish people for alleged securities fraud, SEC did exactly that in Eric Smith’s case. Courts should not reward such brazen defiance simply because Smith didn’t pointlessly remind SEC of its loss in Jarkesy.”
— Russ Ryan, Senior Litigation Counsel, NCLA

“The availability of judicial review in an Article III court is one of the most important protections of liberty ever created. It should not be denied to individuals, like Eric Smith, enmeshed in agency proceedings who seek to challenge the constitutionality of the inherent features of those proceedings.”
— Greg Garre, Former Solicitor General of the U.S., Partner at Latham & Watkins,
and Counsel of Record in Smith v. SEC and FINRA

“It is quite peculiar to say someone must first raise their right to an Article III tribunal before an Article II tribunal in order to preserve it. That is especially so at the SEC, where the commissioners do not have to be lawyers, let alone lawyers versed in the Constitution. Someone stuck in the wrong tribunal must be able to raise that objection to an Article III court. Otherwise, the right to be in an Article III court is illusory.”
— Mark Chenoweth, President and Chief Legal Officer, NCLA

For more information visit the case page here.

ABOUT NCLA
NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.

Joe Martyak
New Civil Liberties Alliance
703-403-1111
joe.martyak@ncla.legal