Mr. Jarkesy lost a bid to throw out the case, an administrative proceeding in which he is accused of defrauding investors.
Mr. Jarkesy and his investment fund management group Patriot28, formerly known as John Thomas Capital Management, argued that they can't get a fair hearing before the SEC. Mr. Jarkesy said the agency has prejudged him as a result of findings in a settlement with John Thomas Financial's founder, Anastasios (Tommy) Belesis.
U.S. District Judge Beryl Howell in Washington ruled that Mr. Jarkesy has to pursue his claims through an established process that includes hearings before an administrative law judge, SEC commissioners and, finally, a court of appeals.
“To the extent that the plaintiffs believe their cause has been prejudged by the SEC commissioners, they may seek review, if necessary, before the court of appeals, but the statute leaves no room for this court to provide them the relief they seek,” Ms. Howell wrote.
Mark Bierbower, an attorney for Mr. Jarkesy, didn't immediately respond to a phone message yesterday seeking comment on the ruling.
The SEC brought claims against Mr. Jarkesy and Mr. Belesis in March 2013, saying they had defrauded hedge fund investors. Mr. Belesis settled the allegations against him in December by agreeing to be banned from the securities industry. The deal gave him the option of applying for reinstatement after a year.
Mr. Belesis and John Thomas Financial were each ordered to pay $500,000.
Mr. Jarkesy, a frequent media commentator and talk show host, led investors to believe that as manager of the funds he was solely responsible for all investment decisions, the SEC said in a statement in March 2013.
Mr. Belesis, in fact, sometimes replaced Mr. Jarkesy in running the funds and funneled money from them to a company he had an interest in, while also “bullying” Mr. Jarkesy into paying substantial, unjustified fees to John Thomas Financial, the SEC said.
The case is Jarkesy v. U.S. Securities and Exchange Commission, 14-cv-114, U.S. District Court, District of Columbia, (Washington).