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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

Updated 7 hours ago - Sports

The potential GOAT of chess faces intriguing challenger

Illustration: Sarah Grillo/Axios

The World Chess Championship between Norway's Magnus Carlsen and Russia's Ian Nepomniachtchi began on Friday, 1,094 days after Carlsen won his fourth consecutive title.

Why it matters: During the long, COVID-fueled layoff, chess entered a new era, and with the championship finally here, the age-old game is ready for its close-up.

Department of Interior proposes raising cost of drilling on public lands

A horizontal drilling rig and a pump jack sit on federal land in Lea County, New Mexico. Photo: Callaghan O'Hare/Bloomberg via Getty Images

Oil and gas companies should pay more to drill on federal lands and waters, the Department of the Interior argued in a report released Friday, saying that the current rates were "outdated."

Driving the news: The Department of Interior report said that the federal government's oil and gas leasing and permitting program "fails to provide a fair return to taxpayers, even before factoring in the resulting climate-related costs that must be borne by taxpayers."

8 hours ago - Health

U.S. to restrict air travel from 8 countries over new COVID variant concerns

A COVID-19 vaccine is administered. Photo by Joe Raedle/Getty Images

The U.S. will impose new air travel restrictions in response to the Omicron variant, a new COVID strain first detected in South Africa, President Biden announced Friday.

The big picture: Air travel from South Africa, Botswana, Zimbabwe, Namibia, Lesotho, Eswatini, Mozambique and Malawi will be restricted starting on Monday.