Division-level employee at the SEC and Commodity Futures Trading Commission are under heightened legal scrutiny for frequently authoring “no-action letters” in response to requests from companies questioning if certain conduct would violate the law. The letters have long been treated as decisions of the agency’s staff that can’t be reviewed by a court.
That perception is being challenged by, among others, by the U.S. Court of Appeals for the Fifth Circuit.
In a Bloomberg Law article, litigation & enforcement partner Amy Jane Longo said, “Administrative agency action is something that is the subject of a lot of litigation right now.” “This is another front of that.”
Agencies could also look to expand their internal reviews or build out the letters with additional reasoning to better withstand a court challenge.
“Having more rigor around no-action letters and their rationales could be an effort to avoid the no-action letter being seen as arbitrary and capricious,” Amy said.
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