In 628 in the Gurjar capital city of Bhillamala (now, Bhinmal, India), the mathemetician Brahmagupta set out to explain how zero and negatives numbers work. In his book, Brahmasphutasiddhanta, he set forth the rule that the product of two negative numbers (debts) is a positive number (fortune). Translating this fundamental mathematical concept into the present century, I’m pondering (pondering, not opining) whether the same rule might hold true in law. (Remember, this blog is about ideas and the law, it is not legal advice.)
Suppose, the California legislature enacts a law directing a city to repeal within 90 days its prohibition on turning right at red lights. Suppose the city fails to do so within the statutorily mandated time period. On the 91st day, you make a right turn on red and are cited. To the extent that any case can be made against you, it is the product of the city’s own violation of the law. Can the city really create illegal actions by its own failures to comply with the law?
Much the same could be said about the Securities and Exchange Commission and the JOBS Act. The JOBS Act was enacted on April 5, 2012. Section 201(a)(1) of the JOBS Act directs the SEC to amend Rule 506 of Regulation D under the Securities Act of 1933 to permit general solicitation or general advertising in offerings made under Rule 506, provided that all purchasers of the securities are accredited investors. Congress gave the SEC a deadline of 90 days to amend Rule 506 (the same amount of time that a non-accelerated filer has to file a Form 10-K). As of today, we’ve seen 300 sunrises without a final rule and the SEC has been in violation of the law for 210 days.
The Administrative Procedure Act may provide a remedy. Section 706(1) (5 U.S.C. § 706(1)) provides that a reviewing court shall “compel agency action unlawfully withheld or unreasonably delayed”. The federal mandamus statute, 28 U.S.C. § 1361, vests the U.S. District Courts with original jurisction “to compel an officer or employee of the United States or any agency thereof to perform a duty owed to the plaintiff.” Last year, Oxfam America relied on both of these statutes in its lawsuit against the SEC for failing to meet the deadline for adopting disclosure rules for resource extraction issuers mandated by Section 1504 of the Dodd-Frank Act. See Supreme Court Fails To Bite At Bulldog And Oxfam America Sues The SEC.