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ARTICLE · 28 NOVEMBER 2024

Federal Court Vacates SEC's Expanded Dealer Definition

K&L Gates
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On 21 November 2024, the US District Court for the Northern District of Texas (Court) ruled against the US Securities and Exchange Commission (SEC) in two separate cases, vacating its rule which expanded...

United StatesLitigation, Mediation & Arbitration
K&L Gates
K&L Gates
Jessica D. Cohn
Jessica D. Cohn
Joshua Durham
Joshua Durham

On 21 November 2024, the US District Court for the Northern District of Texas (Court) ruled against the US Securities and Exchange Commission (SEC) in two separate cases, vacating its rule which expanded the definition of securities dealers.

In February 2024, the SEC adopted a rule expanding the definitions of "dealer" and "government securities dealer" to extend to market participants who provide significant liquidity to the markets (the Dealer Rule). See our client alert dated 29 February 2024 here. The Dealer Rule would have included many market participants who trade for their own accounts, such as private funds.

Several trade associations filed lawsuits challenging the Dealer Rule on the grounds that the SEC exceeded its statutory authority and that the Dealer Rule was arbitrary and capricious and therefore should be vacated in its entirety. The first case was filed by the National Association of Private Fund Managers, Alternative Investment Management

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