Report on Better Markets Issues on the Supreme Court’s 2022-2023 Term, Focusing on the Court’s Views on Financial Regulation and the Structure of the Administrative State

Abortion, gun control, the First Amendment — Supreme Court rulings on these sorts of social policy topics have captured much of the nation’s attention in the past quarter. But the term has also been central to financial regulation and the economic life of Americans, even if these topics have received less headlines. As we discuss in our just-released report, the implications of recent rulings will extend from Americans’ retirement accounts to their options for suing employers or financial advisors. Meanwhile, a stronger conservative majority is now mounting the Court, and it has turned its gaze to the deepest foundations of modern rules to protect consumers, investors and the real economy.

We illustrate the impact of the last mandate by examining several key cases related to financial regulation. The Court, for example, reaffirmed the duty of pension plan administrators to act in the interests of their beneficiaries and opened up new avenues for individual investors, employees and consumers to challenge mandatory arbitration. We then consider some cases from the Court’s next term that will further shape the financial life of this country; next term will decide whether those who violate securities laws can seek to defeat SEC enforcement in federal court, if or when state governments will continue to play a leading role in anti-security challenges. regulations, and to what extent the bank secrecy law will continue to serve as a viable deterrent against hidden foreign accounts. We also look forward to cases on many of the same topics that the Court may take up for subsequent terms.

Finally, our report steps back to take a broader view of trends in administrative law — the legal structure that underpins not just financial regulation, but federal regulation generally. Thanks to a recent decision in West Virginia vs. EPA, the Court has now canonized a new doctrine tilting the field against agency rules dealing with “major issues.” We examine the tenuous justifications behind West Virginia and the troubling implications of this new doctrine. This doctrine, however, is only one part of the conservative majority’s broader assault on modern administrative law. As we point out, signs from other cases point to a waning appreciation of the agencies’ technical expertise and growing confidence in granting ever more power to the Court. We even point out how the Court may be reverting to legal doctrines unheard of since the New Deal battles and how these trends point to a very erosion of the power of Congress vis-à-vis the Court. Each of these deep structural trends will shape the current and future financial regulatory environment to protect individuals and the main street economy.

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