DC Circuit Vacates SEC’s Retroactive Application of Dodd-Frank Remedial Provision: Decision Limiting SEC’s Authority to Bar Based on Misconduct Occurring Prior to Enactment of Dodd-Frank May Provide a Basis for Objecting to Certain CFPB Sanctions

Sullivan & Cromwell LLP - July 23, 2015
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On July 14, 2015, the U.S. Court of Appeals for the District of Columbia Circuit (the “DC Circuit”) held that the Securities and Exchange Commission (the “SEC” or “Commission”) could not employ certain remedial provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank” or the “Act”)  to retroactively punish an investment adviser for conduct that occurred prior to enactment of the Act.  The court’s decision not only casts doubt on numerous similar punishments previously levied by the SEC based on pre-enactment misconduct, but could provide a basis for institutions to object to certain sanctions sought by the Consumer Financial Protection Bureau (the “CFPB”).