Expect Supreme Court nominee Brett Kavanaugh, if confirmed, to be “quite friendly to business interests and financial firms,” writes my Barron’s colleague Daren Fonda.
Kavanaugh appears to take a dim view of regulatory agencies’ rule-making power, absent clear marching orders from Congress. And of course, these agencies are locked in an eternal struggle with the financial industry.
“As a judge on the U.S. Court of Appeals for the District of Columbia, Kavanaugh dissented in a major securities fraud case now before the Supreme Court,” writes Fonda. “In Lorenzo v. Securities and Exchange Commission, the D.C. appeals court ruled in favor of allowing a broader interpretation, in some instances, of a rule that prohibits misleading or false statements made by a financial representative (in this case, a broker who sent an email with false information about a clean energy company). Kavanaugh argued for a tighter standard, saying he would ‘vacate the SEC’s conclusions as to both sanctions and liability.’”
One can speculate that he might have opposed the Department of Labor’s fiduciary rule. But that rule was recently vacated in a Fifth Circuit Court of Appeals Case. A relevant question now is what impact a Justice Kavanaugh might have should the SEC’s proposed “best-interest” rule ever be challenged up to the Supreme Court.