The Enforcement Section of the Missouri Secretary of State Securities Division (the “Enforcement Section”) brought 35 administrative enforcement actions between 2020 and 2021 pursuant to Section 409.6-604, RSMo., which assessed $7.5 million in civil penalties. Some of these administrative actions alleged securities fraud in violations of Section 409.5-501(1), Section 509.5-501(2), and Section 509.501(3). The administrative procedures allow the Missouri Secretary of State appointed Commissioner of Securities (the “Commissioner”) to issue an interim order finding that the respondent has committed securities fraud, which order becomes final unless the respondent requests a hearing. The administrative procedures also authorize the Commissioner to conduct the hearing, in effect serving as both the prosecution and the judge, which may be why only 5 hearings were requested in these 35 enforcement actions.
Section 409.6-603 also authorizes the Missouri Securities Division to file civil actions to enforce alleged securities fraud violations to be tried by a neutral judge in the Circuit Court of Cole County, Missouri. But the Division does not. And why would it when the Commissioner whose job it is to enforce the Missouri securities laws also gets to determine whether those laws have been violated?
But administrative enforcement proceedings for alleged securities fraud cases are not the only play here in Missouri. The case can certainly be made that the Missouri Constitution, art. I, section 22(a) applies to securities fraud enforcement claims, which states: “the right of trial by jury as heretofore enjoyed shall remain inviolate; …” “Quite simply, the words of the provision are intended to guarantee a right, not restrict a right. The choice of words, particularly the use of the words ‘remain inviolate,’ is a more emphatic statement of the right than the simply stated guarantee written some 30 years earlier as the 7th Amendment of the United States Constitution that ‘…the right of trial by jury shall be preserved…’” State ex rel. Diehl v. O’Malley, 95 S.W. 3rd 82, 84 (Mo. Ct. App. 2002).
Credit the U.S. Court of Appeals for the Fifth Circuit for first coming up with this idea in the context of securities fraud administrative enforcement actions in Jarkesy v. Securities and Exchange Commission, 34 F. 4th 446 (5th Cir. 2022), which ruled on May 18, 2022, in a 2-1 decision, that the U.S. Securities and Exchange Commission (“SEC”) may no longer use its own administrative proceedings framework to enforce SEC securities fraud cases. Instead, the SEC must bring such actions in federal district courts where respondents may exercise their rights to civil jury pursuant to the 7th Amendment. The same principle applies to Missouri’s administrative proceedings framework to enforce Missouri securities fraud cases, even though there is also gratuitous language in Diehl and Goodrum v. Asplundh Tree Expert Co., 824 S.W. 2d 6, 11 (Mo. banc 1992), which appears to state otherwise. We disagree. The key is that the rights the Enforcement Section seeks to vindicate in securities fraud administrative enforcement actions are analogous to fraud causes of action at common law brought at the time of Missouri’s 1820 Constitution.
Cosgrove Law Group has experience dealing with these questions. If you are served with a securities fraud administrative enforcement action by Missouri Securities Division and would like to speak with one of our licensed attorneys, call 314-563-2490.
 All statutory references are to the 2020 Revised Statutes of the State of Missouri.
 Committee Meeting Materials, “Administrative Practice Before the Missouri Commissioner of Securities,” 2022 MoBar Fall Conference, Office of the Missouri Secretary of State Securities Division.
 Article, I, Section 22(a), the Missouri Constitution.