961 F.3d 421
D.C. Cir.2020Background
- NYSE Arca and Nasdaq (the Exchanges) adopted fee rules for “depth-of-book” market-data products. Industry groups (SIFMA/NetCoalition) challenged the fees as unreasonable under the Exchange Act.
- In NetCoalition I, this Court upheld the SEC’s market‑based test for fee reasonableness but remanded for record support; after Dodd‑Frank, the filing/approval regime changed.
- Dodd‑Frank made SRO rule changes effective upon filing and made Commission nonsuspension decisions under §19(b)(3)(C) unreviewable; in NetCoalition II the Court dismissed petitions challenging the SEC’s decision not to suspend the fee rules.
- The SEC suggested aggrieved parties could seek review under §19(d) (which authorizes review of SRO actions that “prohibit or limit” a person’s access to services), so SIFMA filed a §19(d) complaint asserting the fees limited access.
- An ALJ found for the Exchanges; the SEC reversed, holding the generally‑applicable fees were unreasonable limits on access. The Exchanges petitioned for review, arguing §19(d) does not permit challenges to generally‑applicable fee rules.
- The D.C. Circuit held §19(d) does not authorize challenges to generally‑applicable fee rules because the text and structure contemplate targeted, person‑specific actions; it vacated the SEC’s order and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §19(d) permits an aggrieved party to challenge a generally‑applicable exchange fee rule as a "limitation" on access to services | §19(d) covers fees because costs limit access; a universal rule can be a "limit" and thus challengeable | §19(d) targets quasi‑adjudicatory actions directed at specific persons; it does not cover universally applicable fee rules | §19(d) cannot be used to challenge generally‑applicable fee rules; a §19(d) limitation must be targeted at specific individuals/entities |
Key Cases Cited
- NetCoalition v. S.E.C., 615 F.3d 525 (D.C. Cir. 2010) (upholding SEC market‑based test for fee reasonableness)
- NetCoalition v. S.E.C., 715 F.3d 342 (D.C. Cir. 2013) (holding nonsuspension decisions under §19(b)(3)(C) are unreviewable)
- Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984) (framework for reviewing agency statutory interpretations)
- Utility Air Regulatory Group v. EPA, 573 U.S. 302 (2014) (agency interpretations must align with statute’s structure and context)
- Keene Corp. v. United States, 508 U.S. 200 (1993) (congressional inclusion/exclusion canon)
- Harrison v. PPG Indus., Inc., 446 U.S. 578 (1980) (ejusdem generis canon)
- MFS Sec. Corp. v. New York Stock Exch., Inc., 277 F.3d 613 (2d Cir. 2002) (example of non‑fee SRO action limiting access)
- National Ass’n of Securities Dealers, Inc. v. S.E.C., 801 F.2d 1415 (D.C. Cir. 1986) (involving a processor fee imposed after one‑on‑one negotiations; not inconsistent with court’s holding)