SEC's Regulatory Agenda in Peril
Welcome to FundFire's weekly News Brief.
The U.S. Supreme Court last week put out two decisions that could imperil the Securities and Exchange Commission's regulatory agenda and test its ability to crack down on industry rule-breakers – and yesterday, the high court delivered another blow by allowing companies to challenge regulations even if the six-year statute of limitations has passed.
On Friday, the court overturned decades of precedent by striking down the basis of the so-called "Chevron deference" which has guided judges to concede to the interpretations of federal law set by regulatory agencies in cases where the meaning of the rule itself is hazy. This sets the groundwork for an array of new lawsuits challenging industry rules.
Just a day before, the court had issued another decision with big consequences for industry regulation: reining in the SEC's use of administrative law judges. Going forward, the regulator will have to bring cases involving monetary penalties to federal court.
Together, the two rulings are likely to pose significant challenges to the SEC's ability to impose new regulations and enforce existing rules, lawyers told FundFire . The SEC declined to comment.
"Bottom line, the SEC is going to be rethinking its enforcement and rulemaking processes, because together these decisions potentially hamstring what has recently been an aggressive rulemaking and enforcement agenda," said Meghan Flinn, a partner at K&L Gates.
Read more here about which industry rules are likely to face near-term legal peril.
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