MFA has joined an amicus curiae brief on U.S. Securities and Exchange Commission v. Keener urging the US Court of Appeals for the Eleventh Circuit to reject the lower court’s holding that an entity is a dealer under the Securities Exchange Act of 1934 if its business is based on the buying and selling of securities. MFA expresses that if the lower court’s holding stands, any professional investor or investment fund, such as a private fund or mutual fund, could potentially be considered a dealer. This would subject a professional investor or investment fund to a body of regulations that are inappropriate for their business. Additionally, it opens a professional investor or investment fund to potential liability for having previously engaged in ordinary investment activities.
The brief makes the following arguments:
- The district court’s holding could suggest private funds should register as dealers and is inconsistent with the overall structure of the securities laws
- applying Exchange Act dealer regulations to the amici’s members would be unprecedented
- Congress provided for regulation of investment advisors and funds in other parts of the securities laws
- The dealer definition should be limited to entities that buy from and sell to customers
- At a minimum, determining “dealer” status required a consideration of additional facts and circumstances
- The holding of the district court erroneously construed SEC v. Big Apple Consulting as setting forth a single factor test for dealer status
- Prior SEC interpretations of section 15(a) of the Exchange Act also indicate that a holistic approach to determining dealer status is warranted
