US Federal Court Vacates SEC’s Dealer Rule – Securities – Corporate/Commercial Law
Earlier today, the US District Judge Reed O’Connor in Fort Worth, Texas made a significant decision. They vacated the rule recently adopted by the Securities and Exchange Commission (SEC) that aimed to expand which entities might need to register as a “dealer” or a “government securities dealer.”
This ruling is big news because the Court did not send the case back to the SEC. This means that the future of “dealer” regulation is now uncertain. The Court found that the SEC couldn’t fix their Dealer Rule to comply with the law, so it had to be scrapped.
Judge O’Connor explained that the Dealer Rule went beyond the SEC’s authority and was an unlawful agency action. The original definition of a “dealer” in the Securities Exchange Act of 1934 required having customers. But the Dealer Rule wanted to force registration for traders who provide liquidity, whether they have customers or not. If this rule hadn’t been overturned, these traders would have had to register as dealers by April 29, 2025.
In addition, SEC Chairman Gary Gensler announced today that he will be stepping down in January 2025. With new leadership coming in, it’s unclear if the SEC will try to challenge the Court’s decision.
This article just scratches the surface, and you may want to seek specialist advice for your specific situation to understand the impact of these changes on you.
