New York Republican State Committee v. Securities and Exchange Commission

On August 25, 2016, the United States Securities and Exchange Commission (hereinafter “Respondent” or “Commission” or “SEC”) approved Rule 2030, reproduced here as Appendix H (also, the “Rule”). Rule 2030 regulates the political contributions of those members of the Financial Industry Regulatory Authority (“FINRA”) who act as “placement agents.” Rule 2030 prohibits a placement agent from accepting compensation for soliciting government business from certain candidates and elected officials within two years of having contributed to such an official’s electoral campaign or to the transition or inaugural expenses of a successful candidate. Rule 2030’s prohibitions raise the following constitutional and Administrative Procedure Act questions:

1. Whether Rule 2030 violates the First Amendment by (a) imposing different contribution limits on candidates running for the same office, and/or (b) restricting otherwise lawful political activity despite the SEC’s failure to identify one instance where a lawful political contribution alone led to quid pro quo corruption.

2. Whether the SEC has the authority to impose restrictions by regulation on the First Amendment rights of placement agents to make or solicit federal political contributions that are otherwise lawful under the Federal Election Campaign Act.

3. Whether Rule 2030 is arbitrary and capricious because it restricts otherwise lawful political activity despite the SEC’s failure to identify one instance where a lawful political contribution alone led to fraudulent or manipulative practices. (i)