This is the third of four articles examining the scope of the Seventh Amendment jury trial right for civil defendants in U.S. Securities and Exchange Commission enforcement actions. Our first article explained why the Seventh Amendment entitles a civil defendant to a jury finding as to those facts that increase the maximum penalty — the “liability” — to which a defendant is exposed. In the second article, we discussed how the jury trial right extends to an assessment of the number of distinct violations committed and how this issue turns on how one defines the “unit of violation” under the federal securities laws. In this article, we address the issues of reliance and loss (or gain) causation in SEC enforcement actions and the jury’s role in assessing such. While the received wisdom among practitioners and some courts is that injury and loss causation have no bearing on an SEC enforcement action and are certainly not issues on which a jury must pass, this is plainly incorrect.

Originally published on Law360 - July 18, 2016.