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83 Cornell Law Review 921 (1998)


Judicial descriptions of SEC no-action letters have run the gamut from law, to orders, to rulings, to informal opinions, to prosecutorial decisions. This judicial failure to characterize no-action letters consistently is symptomatic of a more fundamental problem: many courts treat informal regulatory interpretations in no-action letters as interchangeable with formal and official regulatory interpretations that the full Commission has promulgated. Consequently, courts often defer automatically to the regulatory interpretations in no-action letters. In other words, many courts accept no-action letter authority as definitive interpretations of the federal securities statutes and SEC rules and regulations without independently analyzing the particular regulatory provisions in dispute. This Article contends that such automatic deference is unwarranted as a doctrinal matter. It also identifies important normative reasons why courts should subject no-action letters to meaningful scrutiny prior to relying on them as interpretive authority. Finally, this Article proposes a framework to assist courts in performing this critical function.