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Illustration: Eniola Odetunde/Axios

It's normal for regulators to take on the companies it oversees. What's rarer is the opposite: entities taking their regulators to court — but that might be changing.

Why it matters: The legal showdowns between companies and regulators show just how far big business is willing to go to fight regulations that could dent profits.

What’s happening: In an unprecedented move, the New York Stock Exchange, Nasdaq and Cboe sued the Securities Exchange Commission over the regulatory agency’s “transaction fee pilot" — which would undermine how much money the three largest U.S. stock exchange operators could pay and charge to draw trading onto their platforms.

  • “We don’t look forward to suing our regulator ... [w]ith so much at stake, we have no choice but to ask for judicial relief,” Stacey Cunningham, president of the New York Stock Exchange, wrote in an op-ed earlier this year.

And last month, Institutional Shareholder Services (ISS), the largest proxy adviser whose recommendations can sway how shareholders vote on crucial corporate governance issues, said it would also take the SEC to court.

  • The firm is suing over stricter regulations that would force the proxy adviser to be more transparent about how it makes shareholder recommendations. In the suit, ISS called the agency’s actions “arbitrary and capricious.”
  • “The decision to sue our regulator was not taken lightly, but the stakes are too high,” Gary Retelny, ISS CEO, wrote in an op-ed titled “Why we are suing the SEC.”

The SEC isn’t the only target: Last week, PayPal sued the Consumer Financial Protection Bureau over the regulatory agency’s “Prepaid rule,” which requires prepaid card issuers to disclose fees upfront.

  • In the suit, PayPal says the forced disclosures “misrepresent the fees that most customers pay,” as the Silicon Valley Business Journal reports.

Between the lines: The actions are a sign that “suing a company’s regulator—an uncommon and aggressive tactic—is becoming less taboo,” as the WSJ’s Cezary Podkul notes.

The SEC, for one, has commonly been sued by states or trade groups over the rules that peeve corporations.

  • What they’re saying: “Regulated entities that sue the SEC risk that the SEC might retaliate through more stringent inspections,” Larry Harris, a professor at the University of Southern California Marshall School of Business and former economist at the SEC, tells Axios.
  • “Such retaliation would be wrong, and I have no knowledge that it has ever occurred, but the possibility normally would sober entities thinking about suing the SEC.”

The bottom line: Typically companies push back against regulators behind closed doors. The fights are more commonly starting to play out in public.

Expand chart
Data: Docket Alarm; Shows all cases where SEC is listed as a defendant; Chart: Andrew Witherspoon/Axios

The SEC is facing more suits this year than last, but way fewer than it did in prior years, according to data compiled for Axios by Docket Alarm.

  • Among the suits it’s facing this year: Several states are pushing back against the SEC's broker rule that they say doesn’t go far enough in protecting Main Street investors.

Go deeper:

Go deeper

1 hour ago - World

U.S. strikes Iran-backed militia facilities in Syria

President Biden at the Pentagon on Feb. 10. Photo: Alex Brandon - Pool/Getty Images

The United States on Thursday carried out an airstrike against facilities in Syria linked to an Iran-backed militia group, the Pentagon announced.

The state of play: The strike, approved by President Biden, comes "in response to recent attacks against American and Coalition personnel in Iraq, and to ongoing threats to those personnel," Pentagon press secretary John Kirby said in a statement.

Senate parliamentarian rules $15 minimum wage cannot be included in relief package

Photo: Al Drago/Getty Images

The Senate parliamentarian ruled Thursday that the provision to increase the minimum wage to $15/hour cannot be included in the broader $1.9 trillion COVID relief package.

Why it matters: It's now very likely that any increase in the minimum wage will need bipartisan support, as the provision cannot be passed with the simple Senate majority that Democrats are aiming to use for President Biden's rescue bill.

Dave Lawler, author of World
1 hour ago - World

Biden's big Saudi reset

Mohammed bin Salman. Photo: Ryad Kramdi/AFP via Getty

President Biden spoke with Saudi Arabia's King Salman this evening ahead of the release of a CIA report expected to implicate the king's son, and the kingdom's de facto ruler, in the murder of a U.S.-based journalist, Jamal Khashoggi.

Why it matters: In one month, Biden has ended support for the Saudi war effort in Yemen, frozen a large arms deal and snubbed Crown Prince Mohammed bin Salman (MBS) by declining to speak with him directly.