In June 2024, the U.S. Supreme Court struck down a decades old judicial precedent that provided guidance as to when judges could defer to a federal agencies’ interpretation of a law. The original precedent derived from the 1984 case Chevron v. Natural Resources Defense Council, which gave deference to federal agencies’ interpretations of a law over the judicial system. Although Chevron applied to all federal agencies, in light of a slew of recent litigation by and against the SEC related to rule making and interpretations (for example related to who is a “dealer” – see HERE) I decided to cover it in a blog.
Chevron v. Natural Resources Defense Council
Chevron v. Natural Resources Defense Council (“Chevron”) held that a government agency must conform to any clear legislative statements when interpreting and applying a law, but courts will give the agency deference in ambiguous situations if its interpretation is reasonable. In other words, if a statute is ambiguous a court must defer to an agency’s interpretation so long as that interpretation is reasonable. This principle became known as the Chevron deference. The Chevron deference has been at the center of numerous challenges to agency actions and legislative interpretation since its adoption in 1984. On June 28, 2024, the U.S. Supreme Court issued its decision in Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce overruling the Chevron doctrine.
Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce
In Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce (“Loper”) the U.S. Supreme Court overruled Chevron primarily on the grounds that it improperly shifted the balance of power away from the judicial branch. The Court found that deferring to federal agencies’ interpretations of law in rulemaking deprived the courts of its independent judgement. Citing the Administrative Procedure Act (“APA”), the Court stated that agencies are not entitled to deference when interpreting statutes.
To avoid chaos, the Court made it clear that prior cases that had relied on the Chevron deference were not being called into question. The ruling is not retroactive. Moreover, the Court found that at times, an agency will be given deference such as when the statute specifically provides it with such power, or the matter involves fact finding rather than legal analysis. The shift in legal framework is likely to have significant ramifications going forward across all federal agencies, including the SEC.
The new ruling could impact both the SEC’s regulatory agenda and enforcement proceedings. The SEC has enacted many controversial rules, including related to climate disclosures, which are being challenged in court proceedings. Plaintiffs in these proceedings now have an edge.
Similarly, the SEC has taken an ambitious stance interpreting the meaning of “dealer” to encompass a wide array of small cap investors and has had some success, due in part to the Chevron deference. However, the SEC has only filed actions for unlicensed dealer activity against investors that invest specifically using convertible notes in penny stock issuers. There is nothing in the broker-dealer regulatory regime or guidance that limits broker-dealer registration requirements based on the form of the security being bought, sold or traded or the size of the issuer. The Loper ruling may provide an opportunity for a completely different view on the statutes interpretation.
The Author
Laura Anthony, Esq.
Founding Partner
Anthony, Linder & Cacomanolis
A Corporate and Securities Law Firm
Securities attorney Laura Anthony and her experienced legal team provide ongoing corporate counsel to small and mid-size private companies, public companies as well as private companies going public on the Nasdaq, NYSE American or over-the-counter market, such as the OTCQB and OTCQX. For more than two decades Anthony, Linder & Cacomanolis, PLLC has served clients providing fast, personalized, cutting-edge legal service. The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker-dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions, securities token offerings and initial coin offerings, Regulation A/A+ offerings, as well as registration statements on Forms S-1, S-3, S-8 and merger registrations on Form S-4; compliance with the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers; applications to and compliance with the corporate governance requirements of securities exchanges including Nasdaq and NYSE American; general corporate; and general contract and business transactions. Ms. Anthony and her firm represent both target and acquiring companies in merger and acquisition transactions, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. The ALC legal team assists Pubcos in complying with the requirements of federal and state securities laws and SROs such as FINRA for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the small-cap and middle market’s top source for industry news, and the producer and host of LawCast.com, Corporate Finance in Focus. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.
Ms. Anthony is a member of various professional organizations including the Crowdfunding Professional Association (CfPA), Palm Beach County Bar Association, the Florida Bar Association, the American Bar Association and the ABA committees on Federal Securities Regulations and Private Equity and Venture Capital. She is a supporter of several community charities including the American Red Cross for Palm Beach and Martin Counties, Susan Komen Foundation, Opportunity, Inc., New Hope Charities, the Society of the Four Arts, the Norton Museum of Art, Palm Beach County Zoo Society, the Kravis Center for the Performing Arts and several others.
Ms. Anthony is an honors graduate from Florida State University College of Law and has been practicing law since 1993.
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