Who is George Jarkesy? Summary of Supreme Court SEC trial with hedge fund manager explained

On Nov. 29, 2023, the hedge fund manager, George Jarkesy, claimed that the Securities and Exchange Commission violated his constitutional rights by using internal judges to decide his legal violations instead of letting a jury find him guilty. The U.S. Supreme Court saw the emergence of the case.

In the Securities Exchange Commission (SEC) v. Jarkesy, the U.S. Supreme Court heard the oral arguments on Wednesday. George Jarkesy's appeal may have repercussions in other crucial areas, making it more difficult for the government to impose rules governing the workplace or prosecute polluters who break environmental laws.

George Jarkesy is basically a hedge fund manager, a media analyst, and the host of the George Jarkesy Radio Show on conservative talk radio.

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George Jarkesy is the manager of the hedge fund

Jarkesy is an investor as well (Image via Facebook / George Jarkesy)

The SEC's approach was contested by Texas-based hedge fund manager George Jarkesy, who was found guilty of securities fraud, punished by the agency, and banned from the business.

Republican activist George Jarkesy hosts a conservative radio program. In addition, he also managed two hedge funds. Jarkesy began working for a member of the New York Stock Exchange (NYSE) in the financial services sector in the middle of the 1990s. Moreover, he has also invested in start-up businesses that have seen growth for the last 20 years.

Over the past 20 years, Jarkesy has initiated and participated in several hundred investments. These comprised debt and equity in private, pre-public, and public firms. In a wide range of industry sectors, including media, financial consulting, real estate management, employee leasing, livestock management, technology, healthcare, and biotechnology, Jarkesy has founded, invested in, and assisted in developing the companies.

As a financial counselor and investor, Jarkesy has frequently appeared on television programs, including Fox Business's Willis Watch Dogs, CNBC's Worldwide Exchange, The Willis Report with Gerri Willis, Fox's Fox and Friends, and CNBC's The Call with Kudlow.

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Why was George Jarkesy penalized by the SEC?

The SEC filed civil fraud allegations against Jarkesy on March 22, 2013. Jarkesy and Thomas Belesis of John Thomas Financial are accused of defrauding investors in two hedge funds in the allegations.

Among other things, the complaint also said that Jarkesy misled the investors into believing he was the fund manager when, in reality, Belesis made a lot of the decisions. Furthermore, investors were misled into thinking that KPMG had audited the funds when, in fact, they hadn't.

A specialized jurist, known as an "administrative law judge," found that Jarkesy violated federal securities law. The SEC concluded that these funds misled their investors. Moreover, the government has accused these funds of-

"Arbitrarily inflating the value of certain holdings from $0.30 per share to $3.30 per share— so that they could charge higher management fees."

Additionally, an SEC Administrative Law Judge had determined that two hedge funds founded by Jarkesy had deceived investors with securities fraud in this instance.

Therefore, in addition to fining Jarkesy and the other parties $300,000, the SEC also ordered the disgorgement of $685,000 in unjustified gains, a decision upheld by the SEC Board of Commissioners. Jarkesy was also prohibited from engaging in any securities-related activities.

The SEC's choice to file this lawsuit before an administrative law judge rather than a federal district court, where it would have been heard by a more potent official known as an "Article III" judge, is the subject of Jarkesy's Supreme Court case.