It has been settled law for some time now that the Seventh Amendment right to a jury trial in U.S. Securities and Exchange Commission enforcement actions extends to liability determinations. Unsettled is the question of whether an individual has a right to a jury determination of the facts that set the maximum penalty to which a defendant is exposed under the SEC’s three-tier system. Indeed, that question has not really been tested. The question is significant to defendants in SEC enforcement actions because the factual findings necessary to prove that a violation has occurred and those necessary to set the maximum penalty that may be imposed are not always, or even often, the same.

Originally published in Law360 - July 1, 2016.