Court Ruling Offers Path to Challenge Dodd-Frank (News Story)
August 17, 2011
Industry groups are examining possible legal challenges to the CFTC's plan to curb speculative trading. The catalyst has been a federal appeals court decision in July striking down an S.E.C. rule that would have made it easier for shareholders to nominate company directors.
Until now, Wall Street relied largely on an army of lobbyists to chisel away at 300 new rules flowing from the S.E.C. and the CFTC, among other agencies. But while lobbying might yield the occasional loophole, judicial rulings can halt new rules altogether. Hal S. Scott, a professor at Harvard Law School and a director of the Committee on Capital Markets Regulation, a research group that has been a critic of Dodd-Frank, said, "I do see lots of challenges coming down the pike."
By some measures, the proxy rule was an unlikely choice to challenge on economic grounds. The S.E.C. produced 60 pages on a cost-benefit analysis of the rule and spent 21,000 staff hours drafting it over two years. That the proxy regulation still did not pass muster does not bode well for several other Dodd-Frank rules that received considerably less explication, sometimes only 25 pages, on their economic effects.
Cross References: CEA Sec. 15(a); Office of the Inspector General, A Review Of Cost-Benefit Analyses Performed by the Commodity Futures Trading Commission in Connection with Rulemakings Undertaken Pursuant to the Dodd-Frank Act, http://www.cftc.gov/ucm/groups/public/@aboutcftc/documents/file/oig_inv…