Justin L. Chretien

The report delves into six main topics and 24 subtopics. For each subtopic, the report provides the following sections: regulatory obligations, which include relevant federal securities laws, regulations, and FINRA rules; effective practices; and hyperlinks to additional resources. Additionally, for several topics, the report provides FINRA’s findings, observations, and insights into emerging and continuing trends and risks.

For 40 years, the standard of review for agency rulemaking was set forth in the U.S. Supreme Court’s 1984 decision in Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc. Chevron held that when a statute is silent or ambiguous on a specific issue, courts should defer to the agency’s interpretation if it is based on a permissible construction of the statute. It was under the Chevron deference standard that the ESG rule proposal was drafted. Now, following the Supreme Court’s June 2024 decision in Loper Bright Enterprises v. Raimondo, federal courts will no longer defer to agency interpretations, casting a stormy future for the SEC’s pending ESG rule.

For 40 years, the standard of review for agency rulemaking was set forth in the 1984 case of Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc.[2] In that case, the U.S. Supreme Court held that where a statute was silent or ambiguous with respect to a specific issue, courts would defer to the agency interpretation of the statute if the interpretation was based on a permissible construction of the statute. It was under the Chevron deference standard that these rule proposals were drafted. Now, under the Supreme Court's June decision in Loper Bright Enterprises v. Raimondo,[3] federal courts will not defer to agency interpretations, likely spelling doom for the SEC's climate disclosure and ESG rules.

On November 3, 2023, the Department of Labor proposed yet another fiduciary rule, the latest in more than a decade of DOL efforts to ensure that every financial professional who sells an investment product to a retirement investor is held to a fiduciary standard of care. This proposal, should it become law, will significantly impact insurance agents, independent marketing organizations, and insurance providers.

In December, the U.S. Securities and Exchange Commission issued four rule proposals that would fundamentally transform our nation’s equity markets. The comment period ends March 31, and while the final rules may take another year, followed by implementation periods, if you want to comment, now is the time. The proposals, if they become final rules, would constitute a significant restructuring of our equity markets.