1 F.4th 34
D.C. Cir.2021Background
- The SEC issued a "Governance Order" directing exchanges and FINRA to submit a single consolidated equity data plan replacing three existing Equity Data Plans.
- The Governance Order required the proposed plan to include three contested governance features: (1) non-exchange stakeholder voting representation on the operating committee; (2) aggregation of voting rights for affiliated exchanges as if one exchange; and (3) an independent plan administrator not owned/controlled by an entity that sells proprietary market data.
- Several exchanges petitioned for review, arguing the Governance Order exceeded SEC authority, violated section 11A/regulations, or was arbitrary and capricious.
- The exchanges moved for a stay; the SEC denied the stay and explained the Governance Order did not itself establish the new consolidated plan and that further notice-and-comment on any submitted plan would occur.
- The exchanges filed the required proposed plan; the SEC published it for comment and later issued an Order Instituting Proceedings to determine whether to approve or disapprove the proposed plan.
- The D.C. Circuit raised sua sponte whether it had jurisdiction under Exchange Act § 25(a), which permits review only of "final orders," and ultimately concluded the Governance Order was not final and dismissed the petitions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Governance Order is a "final order" under Bennett v. Spear (consummation of decisionmaking) | Governance Order consummated SEC decision; it definitively required the exchanges to include the three features in their proposal | Governance Order marked SEC conclusion that the challenged provisions were reasonable and within authority | Not final: the Order was tentative; Bennett's "consummation" prong not satisfied |
| Whether requiring exchanges to file a proposal with particular terms eliminates their discretion and makes the Order final | Requiring the exact terms removed petitioner discretion, making the Order effectively final and reviewable now | The Order is only one phase of a larger process and does not finally resolve whether those features will be adopted | Not final: Standard Oil principle applies—finality measured against whole agency process |
| Whether petitioners would have been forced into untimely review if they waited for a final SEC approval | Waiting for SEC approval would have risked untimely petitions for review | Section 25(a) permits review only of final SEC orders; petitioners can timely challenge after final action | Court dismissed petitions for lack of jurisdiction; waiting would not foreclose review under § 25(a) |
Key Cases Cited
- Bennett v. Spear, 520 U.S. 154 (1997) (two-part finality test: consummation and legal consequences)
- FTC v. Standard Oil Co. of California, 449 U.S. 232 (1980) (finality must be assessed in context of the agency’s entire process)
- Domestic Sec., Inc. v. SEC, 333 F.3d 239 (2003) (D.C. Cir. finding of finality where substance was fixed and only timing remained)
- Net Coalition v. SEC, 715 F.3d 342 (2013) (Exchange Act § 25(a) allows review only of final SEC orders)
- DRG Funding Corp. v. Sec’y of HUD, 76 F.3d 1212 (1996) (policy reasons favor requiring final agency action before judicial review)
- Hertz Corp. v. Friend, 559 U.S. 77 (2010) (courts may raise jurisdictional questions sua sponte)
- Am. Trading Transp. Co. v. United States, 841 F.2d 421 (1988) (post hoc appellate counsel explanations cannot establish finality)