In the Firm’s third win in four months in a court challenge to agency rulemaking, S&C obtained a summary judgment decision from the U.S. District Court for the Northern District of Texas vacating the Securities and Exchange Commission’s recently finalized rules expanding the definition of “dealers” that must register under the Securities Exchange Act. The Firm represented two nonprofits representing participants in the digital assets industry, the Crypto Freedom Alliance of Texas and the Blockchain Association.
The plaintiffs argued that the SEC’s expanded dealer definition was “so broad that it could sweep in traders and other participants in DeFi [decentralized finance] protocols, despite the fact that these markets innovated to operate without the need for dealer intermediation.” The district court agreed that “the SEC exceeded its statutory authority by enacting such a broad definition of dealer untethered from the text, history, and structure of the Exchange Act.”
The S&C team representing the plaintiffs includes Judson Littleton (who argued the summary judgment motion), Jeff Wall, Elizabeth Rose, Oliver Engebretson-Schooley, Cooper Godfrey and Gabriella Papper. Judd and Jeff were named runner-up “Litigators of the Week” by the Am Law Litigation Daily for this result.
Earlier this year, S&C won challenges for industry groups in two other consequential agency rulemaking controversies. On behalf of the U.S. Chamber of Commerce and other business groups, we helped secure the first decision vacating the FTC’s noncompete rule, which would have banned virtually all noncompete agreements across the country. And on behalf of internet industry groups, we obtained a stay of the FCC’s net-neutrality rule from the U.S. Court of Appeals for the Sixth Circuit. The rule would treat Internet service providers like common carriers and subject them to a new and massive regime of public-utility-style regulation. The Sixth Circuit heard oral argument on the merits of that challenge last month, and a decision is pending.
S&C also is representing industry and business groups challenging the FCC’s digital-discrimination rule, pending in the Eighth Circuit; the SEC’s securities-lending and short-reporting rules, pending in the Fifth Circuit; and the CFPB’s open-banking rule, pending in the U.S. District Court for the Eastern District of Kentucky.