SDNY Dismisses States’ Lawsuit Against SEC Broker Advice Rule
The federal lawsuit filed by eight attorneys general against the Securities and Exchange Commission over its broker advice rule has been dismissed by the Southern District of New York due to lack of jurisdiction.
The federal lawsuit filed by eight attorneys general against the Securities and Exchange Commission over its broker advice rule has been dismissed by the Southern District of New York due to lack of jurisdiction. The lower court said that the case can be taken up by the U.S. Court of Appeals for the Second Circuit.
“Because the SEC claimed authority to issue Regulation Best Interest under such a broad set of statutory authority, it was necessary to file for relief in both the Southern District of New York and U.S. Court of Appeals for the Second Circuit, which has original jurisdiction over rules promulgated pursuant to the Securities Exchange Act of 1934,” said New York Attorney General Letitia James, at the time the lawsuit was originally filed.
The lawsuit challenges the SEC’s Regulation Best Interest, arguing that it fails “to meet basic investor protections that were laid out in the historic 2010 Dodd-Frank Act.” The attorneys general argue that many retail investors believe that broker-dealers are held to the same fiduciary standard as registered investment advisors.
The complaint was filed last month and includes the attorneys general of New York, California, Connecticut, Delaware, Maine, New Mexico, Oregon, and the District of Columbia.
The SEC adopted Regulation Best Interest in June, which claims to go beyond the current suitability standard, and requires broker-dealers to act in the best interest of their retail customers when making an investment recommendation of any securities transaction or investment.
