XY Planning Network, LLC v. Securities Exchange Commission, No. 19-2886 (2d Cir. 2020)Annotate this Case
The Second Circuit denied a petition for review, under the Administrative Procedure Act, of Regulation Best Interest, which creates new standards of conduct for broker-dealers providing investment services to retail customers. Petitioners claimed that Regulation Best Interest is unlawful under the 2010 Dodd Frank Wall Street Reform and Consumer Protection Act.
The court held that Ford Financial Solutions has Article III standing to bring its petition for review. The court also held that the SEC lawfully promulgated Regulation Best Interest pursuant to Congress's permissive grant of rulemaking authority under Section 913(f) of the Dodd-Frank Act. Finally, the court held that Regulation Best Interest is not arbitrary and capricious, holding that the SEC's interpretation of the scope of the broker-dealer exemption was not so fundamental to Regulation Best Interest as to make the rule arbitrary and capricious, or otherwise not in accordance with law. Furthermore, the SEC gave adequate reasons for its decision to prioritize consumer choice and affordability over the possibility of reducing consumer confusion, and it supported its findings with substantial evidence.