DC Circuit Court Limits SEC Authority in Exchange Fee Dispute
Commentary by Steven Lofchie
The U.S. Court of Appeals for the District of Columbia Circuit ("D.C. Circuit") reversed an SEC determination that the agency had authority, under SEA Section 19(d) ("Oversight of SROs"), to undo "unreasonable" Nasdaq Stock Market, LLC ("Nasdaq") "depth-of-book" fee increases.
The Court held that Section 19(d) was primarily intended to serve as a means for the SEC to review SRO disciplinary actions and could not be stretched to apply to a fee increase that applied to all parties and without discrimination. The Court also found that as a result of changes made by Dodd-Frank to Section 19(b) of the Exchange Act, the SEC's failure to suspend Nasdaq's rule increasing its fees effectively time-barred the SEC from acting.
Commentary
Query whether the Dodd-Frank change to Section 19(b) was intended to put exchange rule increases beyond SEC review where the SEC seemingly failed to act quickly enough to review the increase.