NCLA Asks D.C. Circuit to Reinstate Post-Jarkesy Suit Against SEC’s Juryless “Follow-On” Prosecution

Michael Sztrom and David Sztrom v. Securities and Exchange Commission

Washington, D.C., April 27, 2026 (GLOBE NEWSWIRE) -- The New Civil Liberties Alliance filed its opening brief today urging the U.S. Court of Appeals for the D.C. Circuit to reverse a lower court’s dismissal of father and son investment professionals Michael and David Sztrom’s constitutional lawsuit against the Securities and Exchange Commission. The Sztroms’ lawsuit seeks to stop an illegitimate, in-house “follow-on” enforcement proceeding that SEC launched against them in 2023, approximately seven months after they previously settled an earlier lawsuit SEC had filed against them in a California federal court in 2021. The U.S. District Court for the District of Columbia dismissed the Sztroms’ complaint. The court wrongly held it lacked jurisdiction to hear their claims that SEC is violating their Seventh Amendment right to a jury trial in an Article III court, their Fifth Amendment right to due process of law, and their statutory right to a fair hearing.

The district court’s dismissal of the Sztroms’ case cannot be squared with NCLA’s 2023 Supreme Court victory in SEC v. Cochran, which held that federal district courts do have jurisdiction to hear structural constitutional objections to SEC’s in-house, juryless proceedings. It is also incompatible with the Supreme Court’s 2025 SEC v. Jarkesy decision holding that Article III and the Seventh Amendment prohibit SEC from using non-jury administrative adjudications to penalize respondents for securities law violations. NCLA asks the D.C. Circuit to apply these two important Supreme Court precedents properly to prohibit SEC from continuing its unlawful administrative prosecution against the Sztroms.

NCLA released the following statements:

“The Supreme Court in Jarkesy unequivocally held that when agencies seek to prosecute and punish private citizens for alleged lawbreaking, they need to do so in Article III courts with juries. We hope the D.C. Circuit will put a stop to SEC’s open defiance of that landmark decision.”
— Russ Ryan, Senior Litigation Counsel, NCLA

“When SEC seeks an industry bar in its own captive tribunal rather than a federal court, the deck is stacked from the beginning in ways the Supreme Court has already held to violate due process.”
— Alana Black, Senior Litigation Counsel, 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

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