BNA INSIGHTS: The SEC’s Emergency Order Authority under Section 12(k)(2) of the Securities Exchange Act of 1934

United States and international financial markets are experiencing tumult not seen since the 1930s. Current gyrations in U.S. securities markets have focused attention on numerous regulatory issues, including the power of the United States Securities and Exchange Commission (“Commission”) to intervene in U.S. securities markets in times of extreme market stress. Beginning in 2008, the Commission took a number of actions designed to alleviate market stress, consistent with the Commission’s statutory authority under the Securities Exchange Act of 1934 (the “Exchange Act”). While the fears of financial calamity have seemingly receded, the recent “flash crash” and other unsettling developments such as the Greek debt crisis and accompanying Eurodollar uncertainty reveal market instability that may require Commission action in the future. If any such actions became necessary, the Commission would be able to utilize its emergency order authority, as it did in the summer and fall of 2008…

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