The Clients’ Waiver of Their Rights Under Regulation BI of the Securities and Exchange Commission

TAMAR FRANKEL

BU Law emerita professor Tamar Frankel discusses the Securities and Exchange Commission (SEC)’s Regulation Best Interest (BI), which imposes on broker-dealers a commitment to act in the best interests of their clients. Specifically, Frankel addresses the SEC’s treatment of client waivers of the Regulation BI, which goes even further than general fiduciary law to prohibit any waiver of the broker-dealer’s conflicting interests.

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Pigford v. Perdue

Dockets: 19-5023, 19-5027

Opinion Date: February 21, 2020

Judge: Sentelle

Areas of Law: Arbitration & Mediation, Civil Procedure

Appellant filed suit claiming damages under the Consent Decree created in the 1999 settlement between the Department of Agriculture and a class of African American farmers. After the arbitrator denied the claims, appellant petitioned the district court for "monitor review" of the arbitrator's decision. The district court denied the petition and appellant's two motions for reconsideration. The DC Circuit affirmed the district court's judgment and held that monitor review of the arbitrator's decision would have been futile because there was no evidence of appellant's incompetency in the record before the arbitrator. In this case, appellant's actions could be interpreted as a product of irrationality or confusion or frustration but do not support an inference of incompetence. The court also affirmed the district court's decision declining to modify the consent decree under Federal Rule of Civil Procedure 60(b)(5), because appellant's counsel failed to meet the arbitration deadlines.

NTCH, Inc. v. FCC

Dockets: 18-1241, 18-1242, 18-1243

Opinion Date: February 21, 2020

Judge: Per Curiam

Areas of Law: Communications Law, Government & Administrative Law

NTCH challenged the Commission's three spectrum-management decisions: first, the Commission "modified" Dish Network's license in the AWS-4 Band to authorize the company to develop a stand-alone terrestrial network that could support wireless broadband services; second, the Commission "waived," a year later, certain technical restrictions on these modified licenses, though it conditioned the waivers on Dish Network's commitment to bid a certain sum of money in a public auction for adjacent spectrum in the so-called "H Block;" and third, the Commission designed and conducted "Auction 96," in which Dish Network bid as promised and won the H Block licenses. The DC Circuit denied NTCH's petitions for review of the district court's orders modifying Dish Network's AWS-4 licenses and establishing Auction 96’s procedures. Applying a deferential standard of review, the court held that the Commission's decision to authorize standalone terrestrial services in the AWS-4 Band sought to encourage "innovative methods of exploiting the spectrum," to address the "urgent need" for wireless broadband. Furthermore, the Commission chose to modify Dish Network's licenses largely because of the "technical judgment," that same-band, separate-operator sharing of the spectrum would be impractical. The court held that the Commission's decision was logical and that the Commission's failure to consider an alternative was not unreasonable. The court rejected NTCH's remaining contentions that the Commission's decision exceeded its authority under section 316 of the Communications Act. In regard to the Auction 96 procedures, the court held that NTCH failed to show that the Commission's decision was arbitrary and capricious. However, the court held that the Commission wrongly dismissed NTCH's challenges to the waiver orders for lack of administrative standing, and thus remanded for the Commission to consider those claims on the merits.