HARRISBURG – A pending case before the Pennsylvania Supreme Court will decide whether regulators are free to impose crippling penalties on businesses without putting their cases before juries.
The public-interest group Pacific Legal Foundation is representing Elliott Goldberg, a financial professional, in his fight against the state Department of Banking and Securities. Last week, they asked the Supreme Court to hear their argument, after the Commonwealth Court rejected it.
The fight follows a U.S. Supreme Court ruling, SEC v. Jarkesy, which found those subject to penalties issued by federal agencies are in certain cases entitled to their Seventh Amendment right to a jury trial. The Commonwealth Court found the Seventh Amendment has not been incorporated in state-agency proceedings.
“This strained approach is incompatible with the Commonwealth’s long and storied history of protecting individual rights,” Goldberg’s petition for allowance to appeal says.
“The Court should therefore grant allowance to review whether the Commonwealth Court’s analysis and conclusion faithfully apply Pennsylvania’s right to a trial by jury.”
Goldberg was charged with violations of the Pennsylvania Securities Act for failing to obtain a securities-registration exemption for the offer and sale of LLC notes, among other things. He faced a show cause order in 2021 and the following year was ordered to pay $931,000 by a DBS hearing officer.
He appealed to the DBS, which affirmed. Goldberg was never given a chance to defend himself to a jury of his peers and was instead subject to the opinions of the hearing officers who worked for the very agency prosecuting him.
His case asks whether a state agency can impose penalties through an in-house process. PLF draws similarities to the Jarkesy case, noting it arises out of state securities laws modeled after federal statutes.
“Further, the ‘administrative assessments’ imposed against Mr. Goldberg are clearly civil penalties, not equitable restitution,” PLF wrote.
“(N)o alleged investor here has suffered any loss, and the Department’s $931,000 will be used to pay Department salaries and otherwise fund its own operations – not to provide restitution. Accordingly, Mr. Goldberg was denied his right to a jury trial under the Seventh Amendment.”
