Financial Planning Association v. Securities and Exchange Commission case brief

Financial Planning Association v. Securities and Exchange Commission case brief summary
482 F.3d 481 (2007)

CASE SYNOPSIS

Petitioner financial planning professionals' association petitioned for review of an order of respondent Securities and Exchange Commission (SEC) on the ground that the SEC exceeded its authority in adopting a final rule, 17 C.F.R. § 275.202(a)(11)-1 (2005). The SEC challenged the association's standing and defended its rule under 15 U.S.C.S. §§ 80b-2(a)(11)(C), (F) (amended), 80b-11(a), of the Investment Advisers Act (IAA).

DISCUSSION

• Because the associations' members had to continue to comply with the IAA, but the broker-dealers in the new, exempt category did not, the association had standing. 
• The SEC exceeded its authority under 15 U.S.C.S. § 80b-2(a)(11)(F) (currently § 80b-2(a)(11)(G)) because Congress had addressed the precise issue. 
• The rule was inconsistent with the IAA because it failed to meet either of the requirements for an exemption under § 80b-2(a)(11)(F). 
• Legislative intent did not support an exemption broader than those in § 80b-2(a)(11)(C); thus, the rule did not meet the requirement that § 80b-2(a)(11)(F) exemptions be consistent with the "intent" of § 80b-2(a)(11). Because broker-dealers were already expressly addressed in § 80b-2(a)(11)(C), they were not "other persons" under § 80b-2(a)(11)(F). 
• The plain text of § 80b-2(a)(11)(C) exempted only broker-dealers who did not receive special compensation for investment advice. 
• The text was unambiguous, and therefore, the SEC exceeded its authority. 
• General rulemaking authority under 15 U.S.C.S. § 80b-11(a) suggested no Congressional intent that the SEC could ignore 15 U.S.C.S. § 80b-2(a)(11)(C)'s requirements for broker-dealers to be exempt.

CONCLUSION

The petition was granted and the final rule was vacated.

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