This case will determine whether the SEC can level the playing field for all investors or whether Citadel will succeed in protecting the status quo so it can continue raking in huge and unfair profits. The SEC approved an innovative new order type developed by a pro-investor exchange known as IEX, which helps neutralize the trading advantages that firms like Citadel have because of their high-speed trading technology and preferential data access. Citadel wants to nullify the SEC’s decision and preserve its profits, so it went to court.
Oral arguments can’t tell anyone how a Court will ultimately rule on the merits, but they can reveal what issues the judges seem to care about and how the parties are addressing those concerns. Much of the argument this morning centered on classic legal questions that arise whenever an agency rule is under attack in court. Did the agency have sufficient evidence in the record for its decision, did the agency adequately consider the costs of its action, and should the Court defer to the judgments of the agency, especially on complex and technology-based questions? As the attorneys for the SEC and IEX made clear, the answer to all of those legal questions in this case is yes.
But the back and forth also got to the heart of the matter. IEX came up with a private market solution to address predatory trading practices that extract profits for firms like Citadel at the expense of countless everyday investors seeking to fill their orders. As Better Markets argued in its amicus brief filed in this case, when the SEC approved IEX’s new order type, it did the right thing under the law and in pursuit of its mission to protect investors and the integrity of the markets. We hope that the D.C. Circuit sees through Citadel’s self-serving arguments and upholds this pro-investor, pro-market order type.
Better Markets’ Dennis Kelleher lays out in three minutes what’s at stake and how we’re advocating for investors.