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SEC Advisory Committee To Consider Fee-Shifting Bylaws, But Why?

One agenda item for the upcoming meeting of the Investor Advisory Committee is a "Discussion of Issuer Adoption of Fee-Shifting Bylaws for Intra-Corporate Litigation".  This is indeed an interesting and timely topic in light of the Delaware Supreme Court's holding in ATP Tour, Inc. v. Deutscher Tennis Bund, 2014 Del. LEXIS 209 (Del. May 8, 2014).  But is this within the purview of the Investor Advisory Committee?  After all, the question of enforceability of fee-shifting bylaws is a question of state contract, not federal securities, law.

Congress established the Investor Advisory Committee as part of the Dodd-Frank Act.  Thus, one might expect that the Investor Advisory Committee should fulfill the purposes established by its maker.  Those purposes are spelled out in Section 911 of the Dodd-Frank Act:

The Committee shall—(A) advise and consult with the [Securities and Exchange] Commission on—

(i) regulatory priorities of the Commission;
(ii) issues relating to the regulation of securities products, trading strategies, and fee structures, and the effectiveness of disclosure;
(iii) initiatives to protect investor interest; and
(iv) initiatives to promote investor confidence and the integrity of the securities marketplace;

One would have to be either credulous or contumacious to read into this statute a Congressional intent that the Investor Advisory Committee advise and consult with the Securities and Exchange Commission on matters of state contract law.  So why is the Investor Advisory Committee being allowed to exceed its statutory purposes?

 

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