Thursday, November 7, 2013

Chamber of Commerce of the United States of America v. Securities and Exchange Commission case brief

Chamber of Commerce of the United States of America v. Securities and Exchange Commission case brief summary
412 F.3d 133 (2005)

CASE SYNOPSIS
Petitioner Chamber of Commerce of the United States sought review of a rule promulgated by respondent Securities and Exchange Commission under the Investment Company Act of 1940 (ICA), 15 U.S.C.S. § 80a-1 et seq. The Chamber also alleged that the Commission violated the Administrative Procedure Act (APA), 5 U.S.C. § 551 et seq.

CASE FACTS
The Chamber argued that the Commission improperly promulgated a rule requiring investment companies engaging in exempt transactions to have a board with no less than 75 percent of independent directors and an independent chairman. The Chamber then filed a petition for review of the actions of the Commission.

DISCUSSION

  • In partially granting the petition, the court determined that the Chamber showed that it had suffered an injury in fact because it was unable to buy a desired product; therefore, the case was reviewable under U.S. Const. art. III. 
  • Next, the Commission did not exceed its broad authority under 15 U.S.C.S. § 80a-6(c) in adopting the two conditions. 
  • In addition, the conditions imposed did not conflict with the intent of Congress in 15 U.S.C.S. § 80a-10(a). Section 10(a) implied that more than 40 percent of the directors could have been independent. 
  • However, the court determined that the Commission did not comply with its obligation under the ICA to consider whether the conditions promoted efficiency, competition, and capital formation because it did not consider the costs of the conditions it was imposing. 
  • Finally, the Commission failed to consider the alternatives available.

CONCLUSION
The court partially granted the petition for review after finding that the APA and ICA were violated when the Commission failed to consider the costs and the alternatives available. The case was remanded with directions to address these deficiencies.

Suggested Study Aids For Securities Regulation Law
Securities Regulation in a Nutshell, 10th (Nutshell Series)
Securities Regulation: Examples & Explanations, 5th Edition
Securities Regulations: The Essentials

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