FOR IMMEDIATE RELEASE February 19th, 2025
SEC Abandons Appeal in Dealer Definition Case, But Concerns Over "Regulation by Enforcement" Remain
Washington, D.C. - The Investor Choice Advocates Network (ICAN) welcomes the Securities and Exchange Commission's decision to drop its appeal of a federal court ruling that struck down the agency's dealer registration rule. The rule, which would have significantly expanded the definition of "securities dealer," was invalidated by the U.S. District Court for the Northern District of Texas in November 2024.
"While we applaud the SEC's decision to accept the court's ruling, this victory for market participants should be viewed with cautious optimism," said ICAN President Nick Morgan. "Our ongoing monitoring suggests the SEC's Enforcement Division continues to pursue an expansive interpretation of dealer registration requirements through case-by-case enforcement actions."
ICAN has been at the forefront of challenging regulatory overreach in this area, including filing an influential amicus brief in related litigation before the 11th Circuit Court of Appeals. The organization recently highlighted these concerns at the PIPEs Conference, where industry experts discussed the SEC's pattern of "shadow rulemaking" through targeted enforcement actions.
"The court's decision and the SEC's withdrawal of its appeal represent important checks on administrative overreach," Morgan continued. "However, the SEC's continued strategy of regulation by enforcement means market participants must remain vigilant. ICAN stands ready to defend against unwarranted expansion of dealer registration requirements in both pending and future cases."
The invalidated rule would have required dealer registration from market participants who lack traditional customer relationships - precisely the type of overreach that led to its rejection by the court. ICAN will continue to monitor and, when necessary, challenge similar attempts to expand SEC jurisdiction through enforcement actions under current and future administrations.
For more information about ICAN's work on dealer registration issues, visit www.icanlaw.org or contact: info@icanlaw.org
About ICAN: The Investor Choice Advocates Network (ICAN) is a nonprofit organization dedicated to breaking down barriers to entry to capital markets and pushing back against regulatory overreach. ICAN advocates for fair and transparent regulatory practices, ensuring all individuals have equal access to investment opportunities and due process in the financial markets.
Contact Information: Investor Choice Advocates Network (ICAN) Email: info@icanlaw.org Website: www.icanlaw.org
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