Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

Section 925(a) of the Dodd-Frank Act expanded a remedy for certain violations of securities laws form barring association with broker-dealers to a bar that includes municipal advisors, rating organizations and other regulated associations.  In Koch v. SEC, the United States Court of Appeals for the District of Columbia Circuit held that the SEC cannot apply the expanded bar retroactively to conduct that occurred prior to the time the Dodd-Frank Act was enacted.

According to the Court:

  • The Dodd-Frank Act does not expressly authorize retroactive application.
  • Adding additional associations to the bar enhanced the penalties for violations of the securities laws.
  • Application of the enhanced penalties to Koch was impermissibly retroactive because it attached a new disability to conduct that was over and done.

The Dodd-Frank Act also permitted the SEC to bar Koch in one proceeding rather than separate proceedings for each industry.  However the court found that this was merely procedural and did not give rise to retroactivity concerns.


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