The corrupt Fifth Circuit made it harder to stop fraud. The corrupt Supreme Court is the only thing that can stop them.

On the question of SEC authority, will one Trump-packed court back another's frightening decision? We'll get our first hint during oral arguments.

This Wednesday, the Supreme Court is slated to hear yet another case of its apparent favorite variety: threats to our government’s ability to function.

As if the court’s assaults this term on the CFPB’s existence and on federal agencies’ expert authority — not to mention its myriad attacks on climate regulation, workers’ rights, and the very foundation of our electoral system over the last few years — weren’t enough, a case is now before the justices that could give them a chance to bring chaos to the mechanism the government uses to protect people from fraud and resolve disputes in social services.

That case is Securities and Exchange Commission (SEC) v. Jarkesy, and it’s as bizarre as it is dangerous.

As NYU School of Law professor Noah Rosenblum lays out in a great piece for The Atlantic, the plaintiff, George R. Jarkesy Jr., was fined by the SEC for rampant mismanagement of $24 million in assets from a pair of investment firms he ran and barred from future roles in some parts of the securities market.

Rather than accepting the SEC’s decision as reaping what he illegally sowed, Jarkesy threw a tantrum that has now made its way all the way up to the Supreme Court (with some help from the radical jurists on the Trump-packed Fifth Circuit.) 

At the heart of Jarkesy’s argument is the absurd claims that Congress lacks — and has always lacked — the authority to empower the SEC to investigate and charge fraudsters and that the judge in charge of punishing him was too far removed from executive branch authority. 

So, in short: Is the mechanism the SEC uses to protect investors from fraud constitutional?

If you ask Jarkesy and the extremists on the Fifth Circuit, the answer is a resounding no. In fact the Fifth Circuit says that the SEC has been unconstitutional for years. (As Ian Millhiser explains in Vox, evidently, all it took to notice that alleged glaring legal error was a couple of partisan judges rewriting the law, one of whom is best known for her failed effort to shut down Obamacare.)

The lower court’s ruling is a broad one with dangerous consequences. First, and most obviously, it limits the SEC’s authority to protect people from fraud — one of the agency’s central functions. (Maybe that’s why Elon Musk is supporting Jarkesy’s efforts to gut the SEC.)

Second, it opens the floodgates for a wave of future litigation that could wreak havoc on things like the process to determine eligibility for Social Security benefits. 

And third, it questions the constitutionality of administrative law judges (or ALJs), who carry a major share of the burden for adjudicating legal disputes and keeping our legal system from grinding to a painful halt.

Here’s the reality: ALJs are employed by more than thirty federal agencies, and they outnumber the judges on our federal courts — district courts, circuit courts, and the Supreme Court combined — by about 2-to-1.

Our legal system is already struggling under the weight of a docket much too stacked for the capacity of our too-small court system. There's simply not enough time for these judges to hear the cases they’re responsible for. And that’s with ALJs helping shoulder the caseload.

So imagine the Supreme Court rules in Jarkesy that ALJs are no longer allowed to do their jobs. These thousands of judges are out of work, and caseloads for jurists in the federal courts would grow to twice or even three times their size.

Someone being wrongfully denied Social Security benefits or affected by fraud does not have years to wait for their case to make its way through a broken system like that. These cases need to be handled in a timely manner. And the Supreme Court’s right-wing supermajority could make that impossible.

But the stakes are even larger than that. As Ian Millhiser explains: “In the worst-case scenario for liberal democracy, the Supreme Court could use the Jarkesy case to greenlight many of Trump’s most authoritarian aspirations” by stripping ALJs of civil service protections and paving the way for Trump to fulfill his threat to replace the civil service with people personally loyal to him.

The Fifth Circuit ruling in favor of Jarkesy was utterly without merit — “selective history served up to justify a preferred political outcome,” as Noah Rosenblum describes it. In taking up the case, the Supreme Court has given itself the opportunity to do one of two things: 

1. Win undeserved plaudits from pundits who are too easily impressed by the Court’s occasional moments of restraint, thus burnishing its reputation by doing nothing more than upholding its own precedents; or

2. Eviscerate the government’s ability to serve the public while enabling Donald Trump’s authoritarian plans.

Neither outcome sounds too exciting.