SEC Dealer Rule Is Relic of Chevron Doctrine, Hedge Funds Say

The US Securities and Exchange Commission’s new rule expanding the definition of a securities dealer comes from a “bygone era” of judicial deference to agency actions, hedge fund industry groups told a federal court.

The Chevron doctrine the Supreme Court overruled last month is the rule’s “guiding spirit,” MFA, Alternative Investment Management Association, and National Association of Private Fund Managers said in a Thursday brief.

The SEC’s rule issued in February would boost oversight over proprietary traders and other companies that are responsible for significant liquidity in securities market but operate without registration as dealers. Private funds are concerned ...