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

The United States District Court for the District of Columbia has dismissed a two-count complaint asking the Court to mandate the SEC be required to adopt rules regarding disclosure of political contributions. The plaintiff had submitted a request for rulemaking to the SEC, and the SEC never took action on the request.

In the one count the plaintiff claimed that the SEC’s inaction constituted an “effective denial” of the rulemaking petition that was arbitrary, capricious, and contrary to law. The Court dismissed the claim noting that a claim under § 706(1) of the Administrative Procedures Act can proceed only where a plaintiff asserts that an agency failed to take a discrete agency action that it is required to take. The SEC did not deny the petition; it merely failed to respond to it. Since the SEC did not deny the petition and the plaintiff did not assert that the SEC “failed to act in response to a clear legal duty,” it followed that the plaintiff failed to state a valid APA claim upon which relief can be granted.

In the other count the plaintiff claimed that SEC’s failure to respond to the rulemaking petition was arbitrary, capricious, and contrary to law. The plaintiff claimed Section 25(b)(1) of the Exchange Act granted the Court jurisdiction to hear the claim.  The Court found otherwise noting that portion of the statute involves challenges to final rules promulgated pursuant to specific enumerated provisions of the Exchange Act, and here there were no final rules.  The Exchange Act makes clear in Section 25(a)(1) that review of all “final order[s]” lies in the circuit courts of appeals –– not in the district courts. When the discrete agency action sought –– a final SEC order on a petition for rulemaking –– is itself reviewable exclusively by a circuit court, then an APA unreasonable delay claim is also reviewable exclusively by a circuit.  Therefore this count was dismissed for lack of jurisdiction.


Stinson Leonard Street LLP provides sophisticated transactional and litigation legal services to clients ranging from individuals and privately held enterprises to national and international public companies. As one of the 100 largest firms in the U.S., Stinson Leonard Street has offices in 14 cities, including Minneapolis, Mankato and St. Cloud, Minn.; Kansas City, St. Louis and Jefferson City, Mo.; Phoenix, Ariz.; Denver, Colo.; Washington, D.C.; Decatur, Ill.; Wichita and Overland Park, Kan.; Omaha, Neb.; and Bismarck, N.D.

The views expressed herein are the views of the blogger and not those of Stinson Leonard Street or any client.