Loan Syndications & Trading Ass'n v. Securities & Exchange Commission
2016 U.S. App. LEXIS 4940
| D.C. Cir. | 2016Background
- Congress added Section 15G (codified at 15 U.S.C. § 78o-11) to the Exchange Act via Dodd-Frank, directing four agencies (SEC, Fed Board, FDIC, OCC) to jointly promulgate a credit-risk-retention rule requiring securitizers to retain at least 5% of credit risk.
- The agencies issued a joint Credit Risk Retention Rule on Dec. 24, 2014, covering a broad class of securitizers (including managers of open-market CLOs).
- Loan Syndications and Trading Association (LSTA) petitioned this court for direct review, challenging portions of the joint rule as unlawful or arbitrary and capricious.
- The Exchange Act provides a limited direct-review scheme (15 U.S.C. § 78y): only rules implementing specific, enumerated Exchange Act provisions may be reviewed directly in courts of appeals; other rule challenges must start in district court.
- Section 78o-11 is not among the enumerated provisions in § 78y(b)(1); the agencies expressly relied on § 78o-11 as the rule’s primary authority.
- Parties argued alternative bases for appellate jurisdiction by pointing to other statutes invoked in the rule’s authority sections, but neither party contended any of those statutes independently authorized the joint rule in its entirety.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether this court has jurisdiction for direct review of the joint Credit Risk Retention Rule implementing § 78o-11 | LSTA: The court of appeals has jurisdiction because the agencies invoked other statutes with direct-review provisions and those provisions colorably support parts of the rule | Government: The Exchange Act’s § 78y(d) treats the Board as the Commission and § 78y(b)(1) does not list § 78o-11; thus direct review is not authorized here | Held: No appellate jurisdiction under § 78y(b)(1); challenge must begin in district court |
| Whether invocation of other statutes (e.g., Securities Act, BHCA, other Exchange Act subsections) confers appellate jurisdiction | LSTA: Alternative statutory invocations in the regulatory appendices supply a colorable basis for direct review in the court of appeals | Government: The joint rule was promulgated pursuant to § 78o-11; other statutes do not independently authorize the joint rule or its full scope | Held: Other statutes do not colorably authorize the joint rule; they do not confer appellate jurisdiction |
| Whether pendent appellate jurisdiction or discretion should allow this court to retain the case | LSTA: If parts of the rule are reviewable here, pendent jurisdiction or equitable concerns (efficiency, impending compliance deadline) justify appellate review | Government: No statute supplies a jurisdictional hook for the joint rule; pendent jurisdiction is discretionary and inappropriate without a supporting basis | Held: Court declines pendent appellate jurisdiction and transfers the petitions to district court under 28 U.S.C. § 1631 |
| Whether transfer (rather than dismissal) is appropriate when appellate jurisdiction is lacking | LSTA: Parties want finality and prompt resolution; dismissal would waste time and prejudice parties given compliance deadlines | Court/Gov't: Transfer under § 1631 is available and serves the interests of justice | Held: Court transfers petitions to U.S. District Court for the District of Columbia under 28 U.S.C. § 1631 |
Key Cases Cited
- Commodity Futures Trading Comm’n v. Zelener, 373 F.3d 861 (7th Cir. 2004) (Occam’s Razor observation cited for preferring simple statutory reading)
- Sierra Club v. Thomas, 828 F.2d 783 (D.C. Cir. 1987) (courts’ jurisdiction is limited to what Congress provides)
- Am. Petrol. Inst. v. SEC, 714 F.3d 1329 (D.C. Cir. 2013) (interpretation of Exchange Act’s direct-review scheme and that omissions of provisions were intentional)
- Watts v. SEC, 482 F.3d 501 (D.C. Cir. 2007) (default rule: APA review normally begins in district court absent statutory authorization for direct appellate review)
- NetCoalition v. SEC, 715 F.3d 342 (D.C. Cir. 2013) (jurisdiction under a direct review statute is strictly limited to included agency actions)
- Fla. Power & Light Co. v. Lorion, 470 U.S. 729 (1985) (agencies compile records; courts of appeals often appropriate forums for review; interpret ambiguities for appellate jurisdiction absent clear congressional intent)
- Media Access Project v. FCC, 883 F.2d 1063 (D.C. Cir. 1989) (appellate jurisdiction found where rule could be colorably supported by a statute providing direct review)
- Int’l Bhd. of Teamsters v. Pena, 17 F.3d 1478 (D.C. Cir. 1994) (appellate jurisdiction based on explicit reliance on multiple statutes that could support the rule)
- Pub. Citizen, Inc. v. NHTSA, 489 F.3d 1279 (D.C. Cir. 2007) (pendent appellate jurisdiction doctrine and its narrow, discretionary application)
- Five Flags Pipe Line Co. v. Dep’t of Transp., 854 F.2d 1441 (D.C. Cir. 1988) (courts cannot override congressional jurisdictional choices even for efficiency)