Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—Ariz.App.: NASAA amicus brief argues against jury trial in securities enforcement actions, (Dec 15, 2025)

By Rodney F. Tonkovic, J.D.

NASAA's brief underscores the differences between the Arizona Securities Act and fraud claims at common law prior to Arizona statehood.

The North American Securities Administrators Association has filed an amicus brief before the Arizona Supreme Court supporting the position that jury trials are not required in securities enforcement cases. The Arizona Court of Appeals concluded that the respondents in an administrative proceeding were not entitled to a jury trial because the U.S. Supreme Court has not incorporated civil jury trial rights to the states, and the state constitution did not otherwise provide that right. NASAA's brief argues that there is no guarantee of a jury trial in state securities enforcement actions because the claims are unlike causes of action at common law (Brief of The North American Securities Administrators Association as amicus curiae supporting respondent, EFG America, LLC v. Arizona Corporation Commission, No. CV-25-0134-PR (Ariz. Sup. Ct. Dec. 9, 2025)).

The underlying case involves EFG America, LLC and three of its executives (plus two of their spouses). The petitioners were charged by the Arizona Corporation Commission with the offer or sale of unregistered securities, engaging in transactions by unregistered dealers or salesmen, and securities fraud. The Commission sought a cease-and-desist order, remedial action by the company, administrative penalties, restitution, and recessionary relief.

No jurisdiction? In their answer to the complaint, EFG petitioners asserted that the Commission lacked jurisdiction over the matter under both the Arizona Constitution and the Securities Act. They admitted that they were not registered in Arizona but asserted that state registration was not required because the subject offering was exempt under federal securities laws.

The petitioners asked for a change of venue to a state trial court, and a state administrative law judge denied the request. The Arizona Court of Appeals then upheld the state ALJ’s denial of a change of venue. The appellate court reasoned that only state law applies in this case because the U.S. Supreme Court (as relevant here, in Jarkesy ) has not incorporated the Seventh Amendment to the states. The court explained that the Arizona Constitution does not provide a jury-trial right in the Commission's internal enforcement actions.

Amicus brief. NASAA notes it has a substantial interest in preserving the enforcement authority granted to its members, and that the Arizona Corporation Commission is such a member. Administrative actions are an essential tool for state regulators, and these regulators are better situated than their federal counterparts to detect and stop highly localized frauds, NASAA says.

NASAA points out that the Arizona Constitution preserves the right to trial by jury, to the extent that such a right existed at common law prior to Arizona statehood. The petitioners, the brief says, fail to identify any pre-statehood common-law causes of action equivalent to the Arizona Securities Act. The provisions of the Act at issue here target substantially different conduct than common-law fraud claims and do not have the same elements.

Moreover, the Commission brings enforcement actions to protect investors and the markets in general, and these actions thus have a materially different "character" than private actions seeking damages for common-law fraud, NASAA says. As a result, state courts have held that claims brought under remedial state laws are equitable in nature and not entitled to a jury trial.

Finally, NASAA addresses the petitioners' reliance on Jarkesy, and their argument that because the claims and penalties at issue here are legal in nature, they too were entitled to a jury trial. Jarkesy "employed a different test to answer a different legal question under a different constitution" and is, therefore, inapposite here, NASAA reasons. While the test under the Seventh Amendment focuses on whether a cause of action is legal or equitable in nature, Arizona law requires an analysis of the differences between common-law fraud claims and Commission actions to enforce the state securities laws. The appellate court did not address this question, but NASAA maintains that securities fraud under the Act has no common law antecedent.

The case is No. CV-25-0134-PR.

Attorneys: Gregory G. McGill (McGill Law Firm) for EFG America, LLC, Douglas Elroy Fimrite, Mark Boyd, Ginger Boyd, Donald Carroll and Sonia Carroll. Elizabeth Schmitt, Office of the General Counsel, for Arizona Corporation Commission, Jim O’Conner, Lea Marquez Peterson, Anna Tovar, Kevin Thompson and Nick Myers.

Companies: EFG America, LLC; Arizona Corporation Commission

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