ATLANTA (CN) — Attorneys for the Republican party on Tuesday sought to convince an 11th Circuit panel Securities and Exchange Commission rules limiting political contributions from member firms is an unconstitutional violation of free speech rights.
In a petition filed on Oct. 20, 2016, the Georgia, New York and Tennessee Republican parties claim the agency’s Rule 206, also known as the “pay to play” rule, and a subsequent amendment, Rule 2030, unlawfully “restrict First Amendment-protected political contributions made by member firms and their employees.”
The rules, which were initially proposed by the Financial Industry Regulatory Authority, were approved by the SEC on Aug. 25, 2016.
In their challenge to the rules, the GOP organizations claim the rule is unconstitutional on its face and that even if it were legal, the commission lacked the jurisdiction to enact such a measure.
According to the Republicans, only Congress and the Federal Election Commission are empowered to regulate political contributions.
But even before attorneys for the Republicans began presenting their case Tuesday, at least one member of the three-judge panel questioned whether they should even be hearing the case.
“It seems pretty clear that the Georgia Republican Party doesn’t have standing,” said U.S. Circuit Judge William Pryor Jr. said as attorney Edmund LaCour Jr. rose to speak.
“It seems to me, if they don’t, the venue is improper,” Judge Pryor said, before pointing out the Georgia Republican Party failed to demonstrate it suffered any harm as a result of the SEC’s rules.
“There is no mention of specific officials who have been affected, and the Georgia [Republican] party could have come forward by now with a specific challenge,” Pryor said.
This was no idle question. In a similar case in July 2017, the Six Circuit held three Republican organization lacked standing to challenge the legality of amendments to SEC campaign contribution rules proposed by the Municipal Securities Rulemaking Board.
LaCour responded by arguing the rules pose the potential for harm and slammed the SEC for overstepping its authority.
“The SEC is out of its depth,” LaCour said.
Jeffrey Berger, representing the SEC, responded to LaCour by saying the commission was, in effect, minding its own business.
“We’re not interested in clean elections, we are interested in clean markets,” Berger said.
The GOP wants the 11th Circuit to find the regulation “exceeds the SEC’s and FINRA’s statutory authority, is arbitrary and capricious, and violates the First Amendment.
It is also seeking injunctive relief preventing the SEC from enforcing the rule.