Agency staff regulatory guidance, speeches, and settled enforcement actions can be helpful to the regulated community when seeking to comply with the law; but when agencies use those statements as if they are the law, thereby bypassing the Administrative Procedures Act, such actions can take the regulated by surprise and run afoul of due process. A recent example exists in the mutual fund industry with the SEC’s Share Class Selection Disclosure (SCSD) Initiative, which essentially holds investment advisors liable for not complying in 2013-2017 with a standard first articulated in 2018, but the use of regulatory guidance is being challenged across various agencies and jurisdictions.
In the face of congressional push-back, bank regulators and the SEC last year clarified that agency staff “guidance” is not a rule and claimed that they “do not take enforcement actions based on supervisory guidance.” In connection with CFPB guidance regarding auto lending, the Government Accountability Office found that the guidance was a “rule” for purposes of the Congressional Review Act and thus subject to congressional disapproval. The Supreme Court also is considering cases such as Kisor v. Wilkie regarding judicial deference to administrative agencies. This panel discuss the evolution of regulatory guidance, the limits on its appropriate role, and its current usage by administrative agencies.
Listen to the full podcast here: https://fedsoc.org/events/agency-staff-regulatory-guidance
Moderator: Paul Atkins, CEO, Patomak Global Partners
Barry Barbash, Senior Counsel, Willkie Farr & Gallagher LLP
Buddy Donohue, Mutual Fund Independent Director
Brian Rubin, Partner, Eversheds Sutherland