Opinion ID: 313974
Heading Depth: 1
Heading Rank: 1

Heading: the problem in the context of the statute.

Text: 10 Petitioners predicate this appeal upon both Sec. 25(a) of the Exchange Act and Sec. 10 of the APA. We note preliminarily that Sec. 10 contains no independent grant of appellate jurisdiction to the court of appeals. Rather, it merely amplifies any jurisdictional grant to this court contained in the substance of the Exchange Act. Therefore, our examination must focus upon the terms of Sec. 25(a). To provide perspective on the nature of the problem posed by this motion, and to provide a basis for our examination of the terms of Sec. 25(a), however, it is essential to first examine the provisions of Sec. 19(b). 11 Section 19(b) provides procedures for both voluntary and compelled adoption of Commission recommendations in specified regulatory areas. If the Commission deems a recommendation in any of these areas to be of sufficient import to warrant formal adoption by an exchange, it must send a letter to the exchange requesting it to make voluntarily the recommended alteration in its rules or by-laws. Should the exchange accede, no formal action by the Commission is required. The Commission's recommendation becomes binding upon members of that exchange because the exchange itself had adopted the rule. Once adopted, the exchange must enforce the rule or face possible disciplinary action by the Commission under Sec. 19(a) of the Act. 12 Should the exchange refuse to comply with the request of the Commission to adopt the recommendation, the statute provides: 13 The Commission is further authorized, if after making appropriate request in writing to a national securities exchange that such exchange effect on its behalf specified changes in its rules and practices, and after appropriate notice and opportunity for hearing, the Commission determines that such exchange has not made the changes so requested, and that such changes are necessary or appropriate for the protection of investors or to insure fair dealing in securities traded in upon such exchange or to insure fair administration of such exchange, by rules or regulations or by order to alter or supplement the rules of such exchange. . . . 14 15 U.S.C. Sec. 78s(b). 15 In the instant case, the Commission considered the proposal sufficiently important to direct it to all the registered securities exchanges. Various exchanges refused to comply with the Commission's rule, all for different reasons. After this refusal to comply, the statute vested in the Commission the option to effect the recommendation either by proceeding in a legislative manner- promulgation of a rule, or in an adjudicatory manner-issuance of an order. Here, the Commission chose to promulgate a rule. 16 The crux of the problem posed by this procedural discretion vested in the Commission under Sec. 19(b) lies in the terms of the statutory review powers granted this court under Sec. 25(a) of the Exchange Act. 3 Although the SEC has the option to proceed either by rule or regulation or by order under Sec. 19(b), Sec. 25 is not similarly broad in its grant of review jurisdiction to this court. Rather, Sec. 25(a) allows review here only when an order has been entered by the Commission. Neither any section of the Exchange Act nor of the APA vests jurisdiction in this court to review on direct appeal from the SEC rules or regulations which it has promulgated. 17 Despite this seeming statutory preclusion of our entertaining this appeal, petitioners steadfastly contend we have jurisdiction over this appeal. In their attempt to avoid the lack of a jurisdictional grant under the statute for direct appellate review of Commission rules, petitioners seek to show Rule 19b-2 is an order for purposes of the statute: (1) because of its substantive effect upon the business relationships between PBW and its members; and/or (2) because it was primarily aimed against one exchange, the PBW. On the former point, petitioners contend the decision of the Supreme Court in Columbia Broadcasting System v. United States, 316 U.S. 407, 62 S.Ct. 1194, 86 L.Ed. 1563 (1942), and its progeny are dispositive. 18 To deal with these contentions, we must first examine the structure and underlying legislative history of the Exchange Act, bearing in mind the admonition of the Supreme Court that: 19 We must look . . . to the language of the statute, read in the light of its purposes and its legislative history, to ascertain whether the order for which review in court is provided is contrasted with forms of administrative action differently described as a purposeful means of excluding them from the review provisions. 20 AF of L. v. NLRB, 308 U.S. 401, 60 S.Ct. 300, 84 L.Ed. 347 (1940). 4 After we have completed our examination of these elements, we will turn and consider the petitioners' contentions seriatim. 21