The Commission dressed up the language a bit, of course:
If a contested matter is likely to raise unsettled and complex legal issues under the federal securities laws, or interpretation of the Commission's rules, consideration should be given to whether, in light of the Commission's expertise concerning those matters, obtaining a Commission decision on such issues, subject to appellate review in the federal courts, may facilitate development of the law.
Div'n of Enforcement Approach to Forum Selection in Contested Actions at 5 ("Guidance," emph. added), here. That confirms the fears expressed by many, including Supreme Court Justice Scalia. Last November, he asked: "Does a court owe deference to an executive agency's interpretation of a law that contemplates both criminal and administrative enforcement?" Scalia "doubt[ed] the Government's pretensions to deference. They collide with the norm that legislatures, not executive officers, define crimes," because "Deferring to the prosecuting branch's expansive views of these statutes "would turn [their] normal construction . . . upside-down, replacing the doctrine of lenity with a doctrine of severity." Whitman v. United States, 574 U.S. ___ (2014)(No. 14-29, Nov. 10, 2014)(Scalia, J., concurring), denying certiorari review of, 555 Fed. Appx. 98, 107 (2014) (affirming a criminal 10b-5 conviction, based in part on deference to an SEC interpretation). See my post here. That same month, US District Judge Jed Rakoff warned against displacing "balanced" federal-court development of federal securities law with "administrative fiat" that is given deference on appeal and might lead "the SEC to become, in effect, a law unto itself." My post here. And when SEC Commissioner Piwowar called for more transparency about the Agency's forum-selection at the 44th "SEC Speaks" last February, he warned against the unfairness of rule-making by enforcement. My post here. Why worry? Because the Commission routinely argues it is entitled to deference. In fact, it goes out of its way to claim deference even to interpretations unnecessary to its action. The SEC urged the DC Circuit to give Chevron deference to its dicta that it didn't have to follow a Congressional Dodd-Frank mandate -- urging affirmance of Commission's administrative-proceeding in Montford and Co., Inc. v. SEC, No. 14-1126 (D.C. Cir.). My post here. So when an Executive-Branch administrative agency arrogates to itself the ability to judge its own decisions in quasi-criminal prosecutions and then claim deference from the Judicial Branch, we start Through the Looking Glass:"When I use a word,' Humpty Dumpty said in rather a scornful tone, 'it means just what I choose it to mean - neither more nor less.'
'The question is,' said Alice, 'whether you can make words mean so many different things.' 'The question is,' said Humpty Dumpty, 'which is to be master - that's all."
Lewis Carroll, Through the Looking Glass. Thomas K. Potter, III (tpotter@burr.com) is a partner in the Securities Litigation Practice Group at Burr & Forman, LLP. Resident in the Nashville office, Tom is licensed in Tennessee, Texas and Louisiana. He has over 28 years' experience representing financial institutions in litigation, regulatory and compliance matters. See attorney profile. © 2015 by Thomas K. Potter, III (all rights reserved).
PartnerTom Potter is a Partner in the firm's Nashville office, and his practice focuses on securities, corporate disputes, and appellate litigation. Tom has over 35 years of experience representing business interests.
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