Responding to: Modest Wins for the Administrative State at the Supreme Court — Dan McLaughlin · 2026-06-04

What the Piece Argues

The piece frames recent Supreme Court decisions on SEC disgorgement and FCC enforcement as worrying expansions of administrative agency power, arguing that businesses face constitutional threats when they are penalized without a jury trial. It draws heavily on Justice Clarence Thomas’s dissent to claim that administrative forfeiture and profit clawbacks have crossed from equitable remedies into legal penalties, thereby triggering Seventh Amendment protections. Finally, it laments a unanimous decision that gives generic drug manufacturers more leeway, suggesting that patent holders’ rights are being undermined by state substitution laws.

Receipts

The framing leans on a selective reading of the Seventh Amendment to cast routine investor-protection mechanisms as threats to constitutional rights, while treating corporate patent monopolies as the baseline.

  • The framing wants you to believe
    • Administrative agencies are acting as rogue tribunals, bypassing the Constitution’s jury-trial guarantee to punish businesses at will.
    • The Seventh Amendment was designed to protect corporate balance sheets from equitable disgorgement and FCC forfeiture penalties.
    • Expanding generic drug access at the expense of patent-holding incumbents is a net loss that will stifle pharmaceutical innovation.
  • What’s really going on
    • The SEC’s disgorgement power is a statutory mandate to return stolen money to defrauded investors, a traditional equitable remedy the Supreme Court (Kokesh and Liu) explicitly kept distinct from punitive damages (see Liu v. SEC, 140 S. Ct. 1938, 1945 (2020)).
    • The “administrative state” was built by Congress precisely because federal courts were too slow, too expensive, and too captured by corporate counsel to handle high-volume securities and telecom fraud.
    • The real structural injury here is the systematic delay and cost-shifting that jury-trial demands impose on enforcement, ensuring that only the wealthiest defendants can afford to outlast regulators while defrauded retail investors go uncompensated.

The DEFCON Ladder

When to use: A persuadable family member who is genuinely worried about government overreach but open to seeing how the other side views the same facts.

DEFCON 5 — Polite Reframe

In a perfect world, every dollar a fraudster stole would be traceable to a specific victim. But securities fraud doesn’t work that way, especially in pump-and-dump schemes, where the harm is spread across countless anonymous traders. The SEC’s disgorgement power exists precisely because the legal system recognized, centuries ago, that wrongdoers shouldn’t be allowed to keep their ill-gotten gains just because tracing is hard. This isn’t a “victory” for the administrative state; it’s a victory for the basic principle that crime shouldn’t pay. The Supreme Court unanimously agreed that the SEC could proceed—and even the lone dissenter, Justice Thomas, objected only on Seventh Amendment grounds, not because he thought the fraudsters should keep the money.

When we defend the ability of regulators to recover stolen profits, we’re not defending bureaucratic overreach. We’re defending the investors—the pension funds, the retirees, the small shareholders—who were harmed. The real constitutional question here isn’t whether agencies have too much power; it’s whether the powerful can hide behind procedural technicalities to avoid returning what they took. The Court has been careful to limit disgorgement to net profits and to require that recovered funds go to victims, not the government (Liu v. SEC, 2020). That’s not an unchecked administrative state; that’s the rule of law in action.

When to use: A colleague who leans libertarian and views administrative agencies with deep suspicion, but is capable of appreciating a well-sourced counter-argument.

DEFCON 4 — Firm Moral Superiority

When to use: Identity-protective mixed-faith actors, op-ed readers, or Substack debates where constitutional formalism is wielded to mask corporate impunity.

The piece argues that the administrative state is overreaching by sanctioning businesses without juries, invoking Justice Thomas’s Seventh Amendment dissent to demand stricter limits on agency enforcement and lamenting recent patent rulings that favor generic manufacturers. This ignores the actual record: Congress created the SEC and the FCC to police concentrated capital because the common-law courts are too slow and too expensive to do the job efficiently (15 U.S.C. §§ 77h, 78u(d)). The argument that administrative proceedings are “punishment” without juries is a lawyerly sleight of hand that forgets who pays when enforcement is bogged down. The inversion here is clear: those who invoke the Constitution to shield corporate fraud are acting as corruption-preservers. We are the builders—those who understand that a republic cannot function if the people’s appointed regulators are forced to litigate every penalty to exhaustion while the defendants spend stolen money fighting the process.

DEFCON 3 — Mockery and Ridicule

When to use: A crowded room or social media exchange where the “tyranny of the administrative state” line gets nodding approval from people who’ve never had to deal with a pump-and-dump scheme.

Funny how the people screaming about administrative-state tyrannizing businesses are always the ones with the deepest pockets, while the person who lost their 401(k) to penny-stock fraud is supposed to wait patiently for a jury trial. The piece paints the SEC clawing back stolen profits as a constitutional crisis, but let’s stamp the label where it belongs: using the Seventh Amendment to force jury trials on routine financial fraud makes the federal courts a corporate counsel’s tollbooth. We all know the playbook. You don’t need a theatrical jury; you need the money back. We face truth—those of us who refuse to let a constitutional technicality become a parking lot for stolen wealth, and who demand that the people who built the fraud pay the price without a procedural production in a federal courthouse.

DEFCON 2 — Aggressive Villainization

When to use: Direct responses to institutional talking points that treat corporate defendants as victims of bureaucratic overreach and frame patent monopolies as sacred rights.

The argument here dresses up corporate impunity in the robes of the Seventh Amendment, claiming that administrative agencies are running kangaroo courts that deny businesses their constitutional right to a jury. But look at the trace: the push to jury-ize SEC and FCC enforcement comes straight from the corporate defense bar, whose billable hours thrive on procedural delay. We recognize this for what it is: the anti-administrative state movement weaponizing procedural rights to protect concentrated capital from accountability. When the framers wrote the Seventh Amendment, they were protecting common people from elite-packed courts, not giving securities fraudsters a taxpayer-funded exit ramp from disgorgement. We shrink the police state of the boardroom—those of us who know that regulatory agencies are the only thing standing between the public and an extractive apparatus that would rather bleed investors dry than lose a motion to dismiss.

DEFCON 1 — Nuclear Satire

When to use: Hardline ideological opponents, performative trolls, or moments when the “constitutional overreach” talking point reaches its most grotesque proportions.

The narrative that the administrative state is a rogue tribunal stealing rights from noble businesspeople is a grotesque inversion of reality, a baroque fiction sold to people who don’t realize they’re funding the defense of their own predators. The piece treats generic drug makers offering cheaper medicines as an existential threat to patent holders, while simultaneously demanding that SEC fraudsters get the full theater of a jury trial before they have to hand over the cash. We are staring at a legal architecture where the Constitution is being drafted as a shield for corporate looting and a sword against public health. The inversion is complete: calling for jury trials in securities fraud isn’t about liberty; it’s about running the clock on disgorgement until the stolen money is safely offshore. We defend democracy—those of us who refuse to watch the Seventh Amendment be turned into a speed bump for corporate crime, and who recognize that the real tyranny isn’t an agency asking for your profits back, it’s a legal system that charges you for the privilege of getting robbed.

DEFCON 1+ — Prophetic Indictment

The prophet Amos cried out against those who “trample the head of the poor into the dust of the earth and turn aside the way of the afflicted” (Amos 2:7). He was not speaking of pickpockets. He was speaking of the wealthy who built their houses on the exploited, who manipulated the scales, who made the courts their instrument of extraction. The National Review essay, for all its learned citations, serves exactly that tradition. It comes wrapped in the language of constitutional piety—Seventh Amendment, jury trial, due process—but the project it defends is the ancient one: constructing legal barriers so formidable that the thief can keep the spoils and the victim can never recover them.

We have seen this before. Frederick Douglass, in his 1852 Fourth of July address, indicted the Christianity of the land that protected slavery while mouthing scripture. The essay before us is the legal equivalent: it invokes the Constitution to shield those whose only “right” at issue is the damn right to retain fraudulent proceeds. The pump-and-dump operator in Sripetch—the face of this “modest win for the administrative state”—is the modern field hand, extracting value from the many and distributing it to the few. The SEC’s disgorgement power is the only current mechanism that says: You shall not profit from your fraud. To call that a “victory” for government power is to call the Jubilee a land grab. It is to stand at the temple gates and demand a fee for mercy.

The late King, in his 1967 Riverside address, named the “giant triplets of racism, extreme materialism, and militarism.” We might add a fourth: proceduralism weaponized to protect predation. The essay’s concern for jury trials is a beautiful vessel—polished, precise, historically grounded—but it carries nothing but water for the very materialism King indicted. It frets over the rights of corporate defendants while the investors they defrauded—the retirees, the pensioners, the small savers—are invisible. Their losses are too diffuse to count, too scattered to prove, so the law must protect the concentrated taker. This is the unblushing face the prophet Jeremiah named: “they did not know how to blush” (Jeremiah 8:12). The essay does not blush. It is confident. It is learned. And it is building a wall around the treasure while the temple burns, and the hell with the ones who built the temple in the first place.

When to use: The exhausted ally who needs to scream.

DEFCON 1++ — Profane Scorched-Earth

Are you fucking kidding me? The Supreme Court says, 9–0, that a convicted pump-and-dump fraudster can’t keep the money he stole, and National Review runs a piece calling this a “victory for the administrative state”? What the hell is the administrative state winning here? The right to return stolen property? The catastrophic expansion of the government’s power to say, “Give the fucking money back”? This isn’t a victory for the administrative state. It’s a victory for the bleeding obvious. It’s a victory for the proposition that if you light a bag of shit on someone’s porch, you don’t get to keep the matches.

The entire essay is a tantrum wrapped in a Federalist Society amicus brief. It’s “please think of the poor pump-and-dump operators” with a straight face. The Seventh Amendment, they cry. The jury trial. Oh, won’t someone think of the constitutional rights of the motherfucker who manipulated the stock, cratered the price, and walked away with millions while retail investors ate the loss? What jury is going to look at the evidence of a pump-and-dump and say, “He should keep it”? The reason they want to avoid a jury isn’t that the jury won’t get a chance—it’s that any jury with a pulse would nail his ass to the wall and then vote to give the money to the victims with interest and a handwritten note that says “sorry this happened.”

The recipient of this “modest win” for the administrative state is the defrauded investor. The loser is the fraudster. That is the entire goddamn scorecard. The author knows it. The editors know it. The Federalist Society happy-hour circuit knows it. The piece is a performance, and the performance is for the people who fund the think tanks and the dark-money legal advocacy groups that exist to make sure the SEC is too scared to bring cases because every disgorgement order will be litigated into the heat death of the universe on the grounds that someone somewhere didn’t get to check the jury box.

Fuck that. The only thing “modest” about this win is the modesty of the fraudster’s contrition, which is zero. The Supreme Court told the SEC, “You can keep taking the profits from people who steal.” If your legal theory says that’s a loss for freedom, your legal theory is a scam. Go peddle it to the people who got screwed by the stock manipulation and see how many of them sign your amicus brief. Hell, I’ll wait.

The Deeper Breakdown

The Sripetch case involved a classic “pump and dump” scheme where insiders artificially inflated a penny stock’s price and then sold their shares at the peak, leaving ordinary investors holding worthless stock. The SEC sued to recover the fraudsters’ profits through disgorgement, an equitable remedy with deep roots in English law.

Who benefits from the framing that this is a “victory for the administrative state”? The direct beneficiaries are securities fraud defendants and the well-funded defense bar that represents them. By framing the routine application of an equitable remedy as an unconstitutional power grab, the argument aims to erect procedural barriers—like requiring individualized proof of investor loss—that would render disgorgement practically unavailable in the cases where it is most needed: schemes that intentionally disperse harm across thousands of anonymous victims to make tracing impossible. The broader beneficiary is a legal movement that has spent decades attempting to neuter the SEC’s enforcement powers through the courts, not through legislation.

What are the receipts?

  • Disgorgement is not a penalty or a fine; it is a remedy that strips the wrongdoer of net profits and returns them to harmed investors. The Supreme Court affirmed these limits in Liu v. SEC (2020) and has consistently treated disgorgement as equitable in nature.
  • In Sripetch, the Court was unanimous (9-0). Justice Gorsuch’s opinion drew on centuries of equitable practice, including trespass cases where profits were disgorged without proof of the landowner’s exact monetary loss. The Court explicitly warned the SEC that if it tried to use disgorgement as a penalty, it would raise Seventh Amendment problems under Jarkesy (2024)—but that wasn’t this case.
  • The FCC case (FCC v. AT&T) was 8-1; the majority emphasized that the FCC’s forfeiture process does not impose any legal obligation until a federal court and jury enforce it. The companies’ “reputational harm” argument was rejected because the filing of any complaint or indictment carries similar stigma.

The Omitted Ledger: The piece never discloses the dollar amounts at stake in Sripetch or the number of harmed investors—details that would make concrete just how absurd the individualized-loss standard really is. It also buries the central fact that the SEC’s disgorgement recoveries are regularly returned to investors, not kept by the government. That silence is not oversight; it is the scaffolding the entire “administrative state power grab” narrative stands on. Take the ledger off the high shelf and let the light hit it, and the argument collapses into its real shape: a demand that fraudsters keep the money because proving who lost it is too much work.