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New York Republican State Committee v. Securities and Exchange Commission

United States Court of Appeals, District of Columbia Circuit

August 25, 2015

NEW YORK REPUBLICAN STATE COMMITTEE AND TENNESSEE REPUBLICAN PARTY, PETITIONERS
v.
SECURITIES AND EXCHANGE COMMISSION, RESPONDENT

Argued March 23, 2015.

Page 1127

On Petition For Review and Appeal of a Final Order of the Securities and Exchange Commission. (No. 1:14-cv-01345).

Jason B. Torchinsky argued the cause for petitioners. With him on the briefs were H. Christopher Bartolomucci, Erin E. Murphy, and Brian J. Field.

Allen Dickerson was on the brief for amicus curiae Financial Services Institute, Inc. in support of appellants.

Jeffrey A. Berger, Senior Litigation Counsel, Securities and Exchange Commission, argued the cause for respondent. With him on the brief were Michael A. Conley, Deputy General Counsel, Jacob H. Stillman, Solicitor, and Jacob R. Loshin, Attorney. Thomas J. Karr, Assistant Attorney General, entered an appearance.

Ronald A. Fein was on the brief for amicus curiae Free Speech For People in support of respondent.

Muhammad Umair Khan was on the brief for amicus curiae Letitia James, New York City Public Advocate, and Trustee of the New York City Employees' Retirement System in support of appellee/respondent.

J. Gerald Hebert, Lawrence M. Noble, Fred Wertheimer, and Donald J. Simon were on the brief for amici curiae The Campaign Legal Center and Democracy 21 in support of respondent-appellee.

Before: TATEL and PILLARD, Circuit Judges, and EDWARDS, Senior Circuit Judge. OPINION filed by Circuit Judge PILLARD.

OPINION

Page 1128

Pillard, Circuit Judge :

The New York Republican State Committee and the Tennessee Republican Party (" the plaintiffs" ) sued the Securities and Exchange Commission to invalidate a four-year-old rule, promulgated under the Investment Advisers Act of 1940, regulating campaign contributions by investment advisers. The district court dismissed the suit for lack of subject matter jurisdiction, concluding that courts of appeals have exclusive jurisdiction to hear challenges to rules under the Act. The plaintiffs appealed that decision and concurrently filed a petition asking this court for direct review. We consolidated and expedited the cases. We hold that courts of appeals have exclusive jurisdiction to hear challenges to rules promulgated under the Investment Advisers Act. We therefore affirm the district court's decision. We also hold that such challenges must be brought in this court within sixty days of promulgation of the rule, and there are no grounds for an exception in this case: The law governing where to file was clear during the limitations period, and the length of time the statute affords for pre-enforcement review is adequate. We therefore dismiss the petition as time-barred.

I.

" The Investment Advisers Act of 1940 was the last in a series of Acts designed to eliminate certain abuses in the securities industry, abuses which were found to have contributed to the stock market crash of 1929 and the depression of the 1930's." SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 186, 84 S.Ct. 275, 11 L.Ed.2d 237 (1963). The Act is the linchpin of the federal regulation of financial advisers and money managers. In enacting the Investment Advisers Act, " Congress intended . . . to establish federal fiduciary standards for investment advisers." Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 471 n.11, 97 S.Ct. 1292, 51 L.Ed.2d 480 (1977); see also Transamerica Mortg. Advisors Inc. v. Lewis, 444 U.S. 11, 16-17, 100 S.Ct. 242, 62 L.Ed.2d 146 (1979). Most individuals and firms that provide paid advice about the value of securities or the advisability of

Page 1129

investing in, purchasing, or selling them are considered to be investment advisers subject to the standards of conduct set forth in the Act. See 15 U.S.C. § 80b-2(a)(11).

Under the Act, the Commission has the authority to promulgate " rules and regulations . . . reasonably designed to prevent such acts, practices, and courses of business as are fraudulent, deceptive, or manipulative." Id. § 80b-6(4); see also id. § 80b-11(a). Congress also provided for judicial review of orders the Commission issues pursuant to the Act. According to the relevant provision, " [a]ny person or party aggrieved by an order issued by the Commission" pursuant to the Act " may obtain a review of such order in" an appropriate court of appeals by filing a petition with that court " within sixty days after the entry of such order." Id. § 80b-13(a).

In 2010, the Commission promulgated a rule limiting investment advisers' campaign contributions to certain government officials. Such contributions are not banned, but they now come at a cost. If an investment adviser or certain of its employees contributes to the political campaign of a government official with the power to influence the adviser's hiring by a government client, the adviser must wait two years before it may provide services for compensation to that government client. See Political Contributions by Certain Investment Advisers, 75 Fed.Reg. 41,018 (July 14, 2010) (codified in part at 17 C.F.R. § 275.206(4)-5).

In August 2014, the plaintiffs sued the Commission in federal district court seeking an order declaring that the rule, as applied to federal campaign contributions, exceeds the Commission's statutory authority, violates the Administrative Procedure Act, and violates the First Amendment. They also sought an order enjoining the Commission from enforcing the rule with respect to federal campaign contributions. The district court dismissed the suit for lack of subject matter jurisdiction. New York Republican State Comm. v. SEC, 70 F.Supp.3d 362, 364 ...


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