On February 19, 2025, the Securities and Exchange Commission (the “Commission” or “SEC”) dropped its appeal of a ruling by the U.S. District Court for the Northern District of Texas (“District Court”) on November 6, 2024 that struck down the Commission’s “Dealer Rule.”
The Dealer Rule, adopted by the SEC on February 6, 2024, further defined the terms “dealer “ and “government securities dealer” in Sections 3(a)(5) and 3(a)(44) of the Securities Exchange Act of 1934, respectively, and would have expanded the scope of market participants required to register as such with the SEC, including certain principal trading firms, private funds, investment advisers and crypto asset-related entities. See our prior Client Alert for details. Roughly a month later, industry groups representing the private funds and crypto industries sued the SEC in the District Court to challenge the adoption of the Dealer Rule. Following the District Court’s grant of summary judgment to the plaintiffs resulting in the Dealer Rule being vacated, the SEC, on January 17, 2025, appealed the District Court’s ruling, right before the change in administration. The SEC has now dropped its appeal, signaling the end of the Dealer Rule.