FINANCIAL PLANNING ASSOCIATION, Petitioner v. SECURITIES AND EXCHANGE COMMISSION, Respondent, 375 U.S. App. D.C. 389

Opinion for the Court filed by Circuit Judge ROGERS. Dissenting opinion filed by Circuit Judge GARLAND. ROGERS, Circuit Judge. Brokers and dealers are not subject to the requirements of the Investment Advisers Act (“IAA”) where their investment advice is (1) “solely incidental to the conduct of [their] business as a broker or dealer,” and (2) the broker or dealer “receives no special compensation therefor.” 15 U.S.C. § 80b-2(a)(ll)(C) (2000). The Securities and Exchange Commission, acting pursuant to § 202(a)(ll)(

F) and § 211(

a) of the IAA, 15 U.S.C. §§ 80b-2(a)(ll)(F), 80b-11(a), promulgated a final rule exempting broker-dealers from the IAA when they receive “special compensation therefor.” See “Certain Broker-Dealers Deemed Not to be Investment Advisers,” 70 Fed.Reg. 20,424 (Apr. 19, 2005). The Financial Planning Association (“FPA”) petitions for review of the final rule on the ground that the SEC has exceeded its authority. We agree, and we therefore grant the petition and vacate the final rule. I.

The IAA was enacted by Congress as one title of a bill “to provide for the registration and regulation of investment companies and investment advisers.” Pub.L. No. 76-768, tit. II, 54 Stat. 847 (1940). The other title was the Investment Company Act (“ICA”). Pub.L. No. 76-768, tit. 1, 54 Stat. 789 (1940). These were the last in a series of congressional enactments designed to eliminate certain abuses in the securities industry that contributed to the stock market crash of 1929 and the depression of the 1930s.

Congress had previously enacted the Securities Act of 1933, the Securities Exchange Act of 1934 (hereinafter “the Exchange Act”), the Public Utility Holding Company Act of 1935, and the Trust Indenture Act of 1939. “A fundamental purpose, common to these statutes, was to substitute a philosophy of full disclosure for the philosophy of caveat emptor and thus to achieve a high standard of business ethics in the securities industry.” SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 186, 84 S.Ct. 275,11 L.Ed.2d 237 (1963).

The IAA arose from a consensus between industry and the SEC “that investment advisers could not ‘completely perform their basic function — furnishing to clients on a personal basis competent, unbiased, and continuous advice regarding the sound management of their investments — unless all conflicts of interest between the investment counsel and the client were removed.’ ” Id. at 187, 84 S.Ct. 275 (citation omitted).

According to the Committee Reports, “[t]he essential purpose of [the IAA] ... [was] to protect the public from the frauds and misrepresentations of unscrupulous tipsters and touts and to safeguard the honest investment adviser against the stigma of the activities of these individuals by making fraudulent practices by investment advisers unlawful.” H.R.Rep. No. 76-2639, at 28 (1940). “Virtually no limitations or restrictions exist with respect to the honesty and integrity of individuals who may solicit funds to be controlled, managed, and supervised....

Individuals assuming to act as investment advisers at present can enter profit-sharing contracts which are nothing more than ‘heads I win, tails you lose’ arrangements. Contracts with investment advisers which are of a personal nature may be assigned and the control of funds of investors may be transferred to others without the knowledge or consent of the client.” S.Rep. No. 76-1775, at 21-22 (1940).

Under the IAA, investment advisers are required, among other things, to register and to maintain records, 15 U.S.C. § 80b-3(c) & (e); to limit the type of contracts they enter, id. § 80b-5; and not to engage in certain types of deceptive and fraudulent transactions, id. § 80b-6. Congress has amended the IAA on several occasions, see VII Louis Loss & Joel Seligman, Securities Regulation 3314-15 (3d ed.2003), but the provisions at issue in this appeal have remained, in relevant part, unchanged.

In § 202(a)(ll) of the IAA, Congress broadly defined “investment adviser” as “any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities 15 U.S.C. § 80b-2(a)(ll). Carving out six exemptions from this broad definition, Congress determined that an “investment adviser” did not include: (

A) a bank, or any bank holding company as defined in the Bank Holding Company Act of 1956 which is not an investment company, except that the term “investment adviser” includes any bank or bank holding company to the extent that such bank or bank holding company serves or acts as an investment adviser to a registered investment company, but if, in the case of a bank, such services or actions are performed through a separately identifiable department or division, the department or division, and not the bank itself, shall be deemed to be the investment adviser; (

B) any lawyer, accountant, engineer, or teacher whose performance of such services is solely incidental to the practice of his profession; (

C) any broker or dealer [1] whose performance of such services is solely incidental to the conduct of his business as a broker or dealer and [2] who receives no special compensation therefor; (

D) the publisher of any bona fide newspaper, news magazine or business or financial publication of general and regular circulation; (

E) any person whose advice, analyses, or reports relate to no securities other than securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States, or securities issued or guaranteed by corporations in which the United States has a direct or indirect interest which shall have been designated by the Secretary of the Treasury, pursuant to

section 3(a)(12) of the Securities Exchange Act of 1934, as exempted securities for the purposes of that Act; or (

F) such other persons not within the intent of this paragraph, as the Commission may designate by rules and regulations or order. 15 U.S.C. § 80b-2(a)(ll) (emphasis added). Subsections (

C) and (

F) are at issue in this appeal. Before enactment of the IAA, broker-dealers and others who offered investment advice received two general forms of compensation. Some charged only traditional commissions (earning a certain amount for each securities transaction completed). Others charged a separate advice fee (often a certain percentage of the customer’s assets under advisement or supervision). See 11 Fed.Reg. 10,996 (Sept. 27, 1946).

The Committee Reports recognized that the statutory exemption for broker-dealers reflected this distinction; the Reports explained that the term “investment adviser” was “so defined as specifically to exclude ... brokers (insofar as them advice is merely incidental to brokerage transactions for which they receive only brokerage commissions).” S.Rep. No. 76-1775, at 22 [HA 164]; H.R.Rep. No. 76-2639, at 28 [HA 168], The final rule took a different approach.

After determining in 1999 that certain new forms of fee-contracting adopted by broker-dealers were “not ... fundamentally different from traditional brokerage programs,” the SEC proposed a rule very similar to the final rule, see Notice of Proposed Rulemaking, 64 Fed.Reg. 61,228 (Nov. 10, 1999) (“1999 NOPR”), stating it would act as if it had already issued the rule, id. at 61,227. In adopting the temporary rule, pursuant to subsection (

F) and its general rulemaking authority under IAA § 211(a), the SEC exempted a new group of broker-dealers from the IAA. 64 Fed.Reg. 61,226 (Nov. 10, 1999). After re-proposing the rule in January 2005, again pursuant to its authority under subsection (

F) and § 211(a), the SEC adopted a slightly modified final rule on April 12, 2005, codified at 17 C.F.R. § 275.202(a)(ll)-l. 70 Fed.Reg. 20,424, 453-54. The final rule provides, generally, in Paragraph (a)(1), on “fee-based programs,”- that a broker-dealer who (1) receives special compensation will not be deemed an investment adviser if (2) any advice provided is solely incidental to brokerage services provided on a customer’s account and (3) specific disclosure is made to the customer.

In Paragraph (a)(2), on discount brokerage programs, a broker-dealer will not be deemed to have received special compensation merely because it charges one customer more or less for brokerage services than it charges another customer. Paragraph (

b) lists three nonexclusive circumstances in which advisory services, for which special compensation is received under paragraph (a)(1), would not be performed “solely incidental to” brokerage: when (1) a separate fee or contract exists for advice; (2) a customer receives certain financial planning services; and, (3) generally, a broker-dealer has investment discretion over a client’s account. Para graph (

c) states a “special rule” that broker-dealers registered under the Exchange Act are investment advisers only for those accounts for which they receive compensation that subjects them to the IAA. Paragraph (

d) defines the term “investment discretion,” which appears in paragraphs (a)(1) and (b)(3), to have the same meaning as § 3(a)(35) of the Exchange Act, 15 U.S.C. § 78e(a)(35), except for “discretion granted by a customer on a temporary or limited basis.” The FPA petitions for review, challenging the SEC’s authority to promulgate the final rule. We first address the threshold issue presented by the SEC’s challenge to FPA’s standing. II.

Article III standing is a fundamental prerequisite to any exercise of the court’s jurisdiction, see Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992), and requires, at the “irreducible constitutional minimum,” id., a showing that the litigant has suffered a concrete and particularized injury that is actual or imminent, traceable to the challenged act, and redressable by the court. See Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984); Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 37-38, 41-42, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976).

A petitioner must support each element of its claim to standing “by affidavit or other evidence.” Defenders of Wildlife, 504 U.S. at 561, 112 S.Ct. 2130; see Sierra Club v. EPA, 292 F.3d 895, 899 (D.C.Cir.2002). The SEC maintains that the FPA fails to show injury-in-fact because FPA’s assertions of injury from the final rule’s dual standard are conclusory. The standard for representational standing is well-established: [A]n association has standing to bring suit on behalf of its members when: (

a) its members would otherwise have standing to sue in their own right; (

b) the interests it seeks to protect are germane to the organization’s purpose; and (

c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit. United Food & Commercial Workers Union Local 751 v. Brown Group, Inc., 517 U.S. 544, 553, 116 S.Ct. 1529, 134 L.Ed.2d 758 (1996) (quoting Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333, 343, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977)). The FPA meets this test. The court has “repeatedly recognized that parties ‘suffer constitutional injury in fact when agencies ... allow increased competition’ against them.” U.S. Telecom Ass’n v. FCC, 295 F.3d 1326, 1331 (D.C.Cir.2002) (citation omitted).

The FPA is a non-profit organization with over 27,000 members that exists to advance the financial planning profession. See Decl. of Daniel Moisand, President of the FPA, ¶¶ 1, 2, Petitioner’s BrApp. 1. The final rule creates a dual standard for the provision of investment advice. First, there are investment advisers who are covered by the IAA; many FPA members are investment advisers, and must comply with the IAA. See FPA Comment Letter of Feb. 7, 2005 n. 1.

Second, there is a new group of broker-dealers who are exempted from the IAA even though their activities do not conform to the two-pronged requirements of subsection (C). The two groups compete for customers, and under the final rule one of them (including FPA members) must continue to comply with the IAA, while the other one (the broker-dealers in the new, exempt category) need not. Additionally, contrary to the SEC’s view, the FPA also has prudential standing. Its members are within the IAA’s zone of interest, see Clarke v. Sec. Indus.

Ass’n, 479 U.S. 388, 399, 107 S.Ct. 750, 93 L.Ed.2d 757 (1987), because one of Congress’s purposes in enacting the IAA was to protect the ability of “bona fide” investment advisers to compete on a level regulatory playing field with those advisers who did not fully disclose their conflicts of interest, see Capital Gains, 375 U.S. at 191, 84 S.Ct. 275 (1963). Accordingly, we hold that the FPA has standing to bring its petition. III. The FPA contends that when Congress enacted the IAA, Congress identified in subsection (

C) the group of broker-dealers it intended to exempt, and that subsection (

F) was only intended to allow the SEC to exempt new groups from the IAA, not to expand the groups that Congress specifically addressed. The resolution of the FPA’s challenge thus turns on whether the SEC is authorized under § 202(a)(ll)(

F) or § 211(

a) to except from IAA coverage an additional group of broker-dealers beyond the broker-dealers exempted by Congress in subsection (C), 15 U.S.C. § 80b-2(a)(ll)(C). Subsection (

F) of § 202(a)(ll) authorizes the SEC to except from the IAA “such other persons not within the intent of this paragraph, as the Commission may designate by rules and regulations or order.” 15 U.S.C. § 80b-2(a)(ll)(F). As such, we review the SEC’s exercise of its authority pursuant to subsection (

F) under the familiar two-step analysis of Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Under step one, the court must determine whether Congress has directly spoken to the precise question at issue. “If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.” Id.

Under step two, “if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.” Id. at 843, 104 S.Ct. 2778. In reviewing an agency’s

interpretation of its authority under a statute it administers, the court will uphold that

interpretation as long as it is a reasonable

interpretation of the statute. See Village of Bergen v. FERC, 33 F.3d 1385, 1389 (D.C.Cir.1994). Applying the “traditional tools of statutory construction,” see Chevron, 467 U.S. at 843 n. 9, 104 S.Ct. 2778, the court looks to the text, structure, and the overall statutory scheme, as well as the problem Congress sought to solve. See PDK Labs. Inc. v. DEA, 362 F.3d 786, 796 (D.C.Cir. 2004); Sierra Club v. EPA, 294 F.3d 155, 161 (D.C.Cir.2002). All four elements demonstrate that the SEC has exceeded its authority in promulgating the rule under § 202(a)(ll)(

F) because Congress has addressed the precise issue at hand.

Section 202(a)(ll) lists exemptions (A)(

E) from the broad definition of “investment adviser” for several classes of persons — including, for example, lawyers, accountants, and others whose advice is “solely incidental” to their regular business; and publishers of newsletters that circulate widely and do not give individually-tailored financial advice. Among the IAA exemptions is subsection (C)’s exemption for “any broker or dealer whose performance of such [investment advisory] services is solely incidental to the conduct of his business as a broker or dealer and who receives no special compensation therefor.” (Emphasis added). Beyond the listed exemptions, subsection (

F) authorizes the SEC to exempt from the IAA “such other persons not within the intent of this paragraph, as the Commission may designate by rules and regulations or order.” (Emphasis added). In the final rule, the SEC purports to use its authority under subsection (

F) to broaden the exemption for broker-dealers provided under subsection (C). The rule is inconsistent with the IAA, however, because it fails to meet either of the two requirements for an exemption under subsection (F). First, the legislative “intent” does not support an exemption for broker-dealers broader than the exemption set forth in the text of subsection (C); therefore, the final rule does not meet the statutory requirement that exemptions under subsection (

F) be consistent with the “intent” of paragraph 11 of

section 202(a). Second, because broker-dealers are already expressly addressed in subsection (C), they are not “other persons” under subsection (F); therefore the SEC cannot use its authority under subsection (

F) to establish new, broader exemptions for broker-dealers. The final rule’s exemption for broker-dealers is broader than the statutory exemption for broker-dealers under subsection (C). Although the SEC maintains that the intent of paragraph 11 is to exempt broker-dealers who receive special compensation for investment advice [Red Br. 28; Oral Arg. Tape at 31:50], the plain text of subsection (

C) exempts only broker-dealers who do not receive special compensation for investment advice. The word “any” is usually understood to be all inclusive. See New York v. EPA, 443 F.3d 880, 885 (D.C.Cir.2006). As “[t]he plain meaning of legislation should be conclusive, except in the ‘rare cases [in which] the literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters,’ ” United States v. Ron Pair Enters., Inc., 489 U.S. 235, 242, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989) (quoting Griffin v.

Oceanic Contractors, Inc., 458 U.S. 564, 571, 102 S.Ct. 3245, 73 L.Ed.2d 973 (1982)), the terms of the IAA establish the precise conditions under which broker-dealers are exempt from the IAA. “To read out of a statutory provision a clause setting forth a specific condition or trigger to the provision’s applicability is ... an entirely unacceptable method of construing statutes.” Natural Res. Def. Council v. EPA, 822 F.2d 104, 113 (D.C.Cir.1987). No other indicators of congressional intent support the SEC’s

interpretation of its authority under subsection (F). The relevant language in the committee reports suggests that Congress deliberately drafted the exemption in subsection (

C) to apply as written. Those reports stated that the “term ‘investment adviser’ is so defined as specifically to exclude ... brokers (insofar as them advice is merely incidental to brokerage transactions for which they receive only brokerage commissions).” S.Rep. No. 76-1775, at 22 (emphasis added) [HA 164]; see also H.R.Rep. No. 76-2639, at 28 [HA 168]. By seeking to exempt broker-dealers beyond those who receive only brokerage commissions for investment advice, the SEC has promulgated a final rule that is in direct conflict with both the statutory text and the Committee Reports. The text of subsection (

F) confirms this conclusion by the limiting the SEC’s exemption authorization to “other persons.” We agree with the FPA that when Congress enacted the IAA, Congress identified the specific classes of persons it intended to exempt. As to broker-dealers, subsection (

C) applied to “any broker or dealer.” Congress, through the use of contrasting text in subsection (F), signaled that it only authorized the SEC to exempt “other persons” when consistent with the intent of the paragraph, and thus only when doing so would not override Congress’s determination of the appropriate persons to be exempted from the IAA’s requirements. As the FPA points out, the word “other” connotes “existing besides, or distinct from, that already mentioned or implied.” II The Shorter Oxford English Dictionary 1391 (2d ed.1936, republished 1939). See Key v. Allstate Ins.

Co., 90 F.3d 1546, 1550 (11th Cir.1996) (citing The American Heritage Dictionary 931. (1981)). There is nothing to suggest that Congress did not intend the words “any” or “other” to have them, “ordinary or natural meaning.” Smith v. United States, 508 U.S. 223, 228, 113 S.Ct. 2050, 124 L.Ed.2d 138 (1993). So understood, courts have hesitated to allow parties to use language structurally similar to the “other persons” clause in subsection (

F) to redefine or otherwise avoid specific requirements in existing statutory exceptions. In Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847, 864 n. 11, 108 S.Ct. 2194, 100 L.Ed.2d 855 (1988), for example, the Supreme Court noted that where Federal Rule of Civil Procedure 60(

b) contained five explicit grounds for relief, and one non-specific “any other reason” clause, (emphasis added) the structure of the clauses suggested that the final clause could not be used to elude or enlarge the first five — that “clause (6) and clauses (1) through (5) are mutually exclusive(emphasis added). Accord Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 393, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993); Hesling v. CSX Transp. Inc., 396 F.3d 632, 643 (5th Cir. 2005); United States v. Erdoss, 440 F.2d 1221, 1223 (2d Cir.1971). Similarly, in Am. Bankers Ass’n v.

SEC, this court explained that: A universal clause preceding every definition in the statute, which states only “unless the context otherwise requires,” cannot provide the authority for one of the agencies whose jurisdictional boundaries are defined in the statute to alter by administrative regulation those very jurisdictional boundaries. To suggest otherwise is to sanction administrative autonomy beyond the control of either Congress or the courts. 804 F.2d 739, 754 (D.C.Cir.1986).

Our dissenting colleague attempts to distinguish these two cases as limited to situations in which one agency seeks to redraw the jurisdictional boundaries of another agency. See Dissenting Op. at [7-9]. That

interpretation, however, ignores the underlying principle in each case: where the statutory text is clear, an agency may not use general clauses to redefine the jurisdictional boundaries set by the statute. Just as the text and structure of paragraph of 202(a)(ll) make it evident that Congress intended to define “investment adviser” broadly and create only a precise exemption for .broker-dealers, so does a consideration of the problems Congress sought to address in enacting the IAA.

A comprehensive study conducted by the SEC pursuant to the Public Utility Holding Company Act of 1935 indicated that “many investment counsel have ‘strayed a great distance from that professed function’ of furnishing disinterested, personalized, continuous supervision of investments.” Securities and Exchange Commission, Investment Counsel, Investment Management, Investment Supervisory and Investment Advisory Services, at 25 (1939) (quoting testimony of brokerage executive James N. White, of Scudder, Stevens & Clark).

Floor debate on the IAA called attention to the fact that while this study was being conducted investment trusts and investment companies had perpetrated “some qf the most flagrant abuses and grossest violations of fiduciary duty to investors.” 86 Cong. Rec. 2844 (daily ed. Mar. 14, 1940) (statement of Sen. Wagner). Congress reiterated throughout its proceedings an intention to protect investors and bona fide investment advisers.

The overall statutory scheme of the IAA addresses the problems identified to Congress in two principal ways: First, by establishing a federal fiduciary standard to govern the conduct of investment advisers, broadly defined, see Transamerica Mortgage Advisors v. Lewis, 444 U.S. 11, 17, 100 S.Ct. 242, 62 L.Ed.2d 146 (1979), and second, by requiring full disclosure of all conflicts of interest.

As the Supreme Court noted, Congress’s “broad proscription against ‘any ... practice ... which operates ... as a fraud or deceit upon any client or prospective client’ remained in the bill from beginning to end.” Capital Gains, 375 U.S. at 191, 84 S.Ct. 275. [T]he Committee Reports indicate a desire to ... eliminate conflicts of interest between the investment adviser and the clients as safeguards both to ‘unsophisticated investors’ and to ‘bona fide investment counsel.’ The [IAA] thus reflects a ... congressional intent to eliminate, or at least to expose, all conflicts of interest which might incline an investment adviser — consciously or unconsciously — to render advice which was not disinterested.

Id. at 191-92, 84 S.Ct. 275. This statutory scheme is inconsistent with a construction of the SEC’s authority under subsection (

F) that would enable persons Congress determined should be subject to the IAA to escape its restrictions. In an attempt to overcome the plain language of the statute, the SEC asserts that Congress was also concerned about the regulation of broker-dealers under both the IAA and Exchange Act, and that such concern was reflected in the “intent” of the paragraph. See 70 Fed.Reg. 20,430; see also 64 Fed.Reg. 61,228. The SEC points to no convincing evidence that supports these assertions. At the time Congress enacted the IAA in 1940, broker-dealers were already regulated under the Exchange Act.

In the IAA, Congress expressly acknowledged that the broker-dealers it covered could also be subject to other regulation. IAA § 208(b), 15 U.S.C. § 80b-8(b). The IAA’s essential purpose was to “protect the public from the frauds and misrepresentations of unscrupulous tipsters and touts and to safeguard the honest investment adviser against the stigma of the activities of these individuals by making fraudulent practices by investment advisers unlawful.” H.R.Rep. No. 76-2639 at 28; see also id. at 21.

As the FPA emphasizes, there is nothing in the committee reports to suggest that Congress was particularly concerned about the regulatory burdens on broker-dealers. While the SEC’s failure to respect the unambiguous textual limitations marked by the phrase “intent of this paragraph” and “other persons” is fatal to the final rule, an additional weakness exists in the SEC’s

interpretation: It flouts six decades of consistent SEC understanding of its authority under subsection (F). Cf. Commodity Futures Trading Comm’n v. Schor, 478 U.S. 833, 844, 106 S.Ct. 3245, 92 L.Ed.2d 675 (1986); Red Lion Broad. Co. v. FCC, 395 U.S. 367, 380-82, 89 S.Ct. 1794, 23 L.Ed.2d 371 (1969). Subsection (

F) is not a catch-all that authorizes the SEC to rewrite the statute. Rather, as subsection (F)’s terms provide, the authority conferred must be exercised consistent with the “intent of this paragraph” and apply to “other persons.” The SEC cannot point to any instance between the 1940 enactment of the IAA and the commencement of the rulemaking proceedings that resulted in the final rule in 2005, when it attempted to invoke subsection (

F) to alter or rewrite the exemptions for persons qualifying for exemptions under subsections (A)-(E). Rather, the SEC has historically invoked subsection (

F) to exempt persons not otherwise addressed in the five exemptions established by Congress: For example, the adviser to a family trust who was otherwise subject to fiduciary duties, Oral Arg. Tape at 39:20-43:24; or new groups, such as thrift institutions acting in a fiduciary capacity, 69 Fed.Reg. 25,777-90 (May 7, 2004), and World Bank instrumentalities that provide advice only to sovereigns, In re Int’l Bank for Reconstr. & Dev., 2001 SEC LEXIS 1782 (Sept. 4, 2001). As the SEC’s own actions for the last 65 years suggest, subsection (

F) serves the clear purpose of authorizing the SEC to address persons or classes involving situations that Congress had not foreseen in the statutory text — not to broaden the exemptions of the classes of persons (such as broker-dealers) Congress had expressly addressed. The SEC unconvincingly attempts to defend its expansive

interpretation of subsection (

F) by likening it to

section 6(

c) of the ICA, 15 U.S.C. § 80a-6(c).

Section 6(

c) of the ICA empowers the SEC to grant exemptions from the ICA, or any rule or regulation adopted under it, “if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions” of the ICA. This court has noted that the SEC “has exercised this authority to exempt persons not within the intent of the [ICA] and generally to adjust its provisions to take account of special situations not foreseen when the [ICA] was drafted.” NASD v.

SEC, 420 F.2d 83, 92 (D.C.Cir.1969), vacated on other grounds, Investment Co. Inst. v. Camp, 401 U.S. 617, 91 S.Ct. 1091, 28 L.Ed.2d 367 (1971). Reliance on NASD does not advance the SEC’s position as the plain text of the ICA is far broader than that of IAA subsection (F). The ICA expressly refers to the SEC’s view of “the public interest” as a basis for new exemptions. “[W]e assume that in drafting ... legislation, Congress said what it meant.” United States v. LaBonte, 520 U.S. 751, 757, 117 S.Ct. 1673, 137 L.Ed.2d 1001 (1997).

Although Congress amended the IAA in 1970, see supra n. 3, and repeated the same ICA language highlighted in NASD in § 206A of the IAA, 15 U.S.C. § 80b-6a, the SEC disavows any reliance on § 206A in promulgating the final rule, see 70 Fed. Reg. 20,453; Respondent’s Br. at 27 n. 10, and thus the court has no occasion to express an opinion on the SEC’s authority under it, see SEC v. Chenery Corp., 318 U.S. 80, 95, 63 S.Ct. 454, 87 L.Ed. 626 (1943). But the broader language found in § 206A supports the conclusion that subsection (

F) must be read more narrowly. Cf. Duncan v. Walker, 533 U.S. 167, 174, 121 S.Ct. 2120, 150 L.Ed.2d 251 (2001); City of Chicago v. Envtl. Def. Fund, 511 U.S. 328, 338, 114 S.Ct. 1588, 128 L.Ed.2d 302 (1994). In light of the'context in which Congress drafted subsections (

C) and (F), we conclude that, as indicated by the structure of § 202(a)(ll) and the problems that Congress addressed .in the IAA, as well as the other indicators of Congress’s intent, under Chevron step one the text of subsections (

C) and (

F) is unambiguous, and that, therefore, the SEC has exceeded its authority in promulgating the final rule. Our dissenting colleague’s analysis fails to confront two realities of statutory construction. First, “[a]mbiguity is a creature not of definitional possibilities but of statutory context.” Brown v. Gardner, 513 U.S. 115, 118, 115 S.Ct. 552, 130 L.Ed.2d 462 (1994). Congress has used words having ordinary meaning — “any broker or dealer” in subsection (

C) and “other persons” in subsection (F) — and a familiar structure to express its “intent” in addressing problems identified by the industry and the SEC. Second, the absence of a statutory definition of “intent of this paragraph” and “other persons” does not necessarily render their meaning ambiguous. See Goldstein v. SEC, 451 F.3d 873, 878 (D.C.Cir.2006). Again, the meaning of the text is defined by its context as set forth in the normal meaning of the words, the structure of paragraph 11, and the problems Congress sought to address in the IAA.

Because the court’s duty is to give meaning to each word of a statute, the court cannot properly treat one authorization, under subsection (F), as duplicative of .another authorization, under

Section 206A. See supra at [491-92]; Dissenting Op. at [498]. Consequently,

section 202(a)(ll)(

F) does not lend itself to alternative meanings; to conclude otherwise would undermine Congress’s purpose in enacting the IAA — to protect consumers and honest investment advisers and to establish fiduciary standards and require full disclosure of all conflicts of interests of “investment advisers,” broadly defined. The SEC’s suggestion that “new” broker-dealer marketing developments fall within the scope of its authority under subsection (

F) ignores its own contemporaneous understanding of Congressional intent to capture such developments. See supra at [490-91] and note 7. Although an agency may change its

interpretation of an ambiguous statute, all elements of the traditional tools of statutory

interpretation confound the SEC’s effort to walk away from its long-settled view of the limits of its authority under subsection (

F) and our dissenting colleague’s attempt to find an alternative meaning at this late date. The SEC’s invocation of its general rule-making authority under IAA

section 211(a), is likewise to no avail because it suggests no intention by Congress that the SEC could ignore either of the two requirements in subsection (

C) for broker-dealers to be exempt from the IAA. See Am. Bankers, 804 F.2d at 755. Paraphrasing an apt observation, while, in the SEC’s view, “[t]he statute may be imperfect, ... the [SEC] has no power to correct flaws that it perceives in the statute it is empowered to administer. Its [subsection (

F) authority and its] rulemaking power[s][are] limited to adopting regulations to carry into effect the will of Congress as expressed in the statute.” Bd. of Governors v. Dimension Fin. Corp., 474 U.S. 361, 374, 106 S.Ct. 681, 88 L.Ed.2d 691 (1986). Accordingly, we grant the petition and vacate the final rule. See North Carolina v. Fed. Energy Regulatory Comm’n, 730 F.2d 790, 795-96 (D.C.Cir.1984); cf. K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 294, 108 S.Ct. 1811, 100 L.Ed.2d 313 (1988). The final rule does not contain a severability clause; nor does the SEC suggest it is severable. Paragraph (

b) is expressly tied to paragraph (a). Although, absent (

a) or (b), paragraph (

c) merely states the current law, the SEC identifies paragraph (

c) as one of “three separate, yet related, parts” of the final rule. Respondent’s Br. at 11, 13. Paragraph (

d) defines a term used in paragraphs (

a) and (b). The SEC release to the final rule states that paragraph (

d) institutes a policy change based on its

interpretation of subsection (F), see 70 Fed.Reg.20,439^140, but otherwise identifies paragraph (

d) in the release as part and parcel of the final rule, see, e.g., id. at 20,424. . In the wake of the Enron and WorldCom collapses, Congress enacted the Credit Rating Agency Reform Act of 2006 (‘'CRARA”), Pub.L. No. 109-291, 120 Stat. 1327, 1337 (2006), which included an amendment to the IAA to add a new exception to the definition of "investment adviser" in § 202(a)(ll) for statistical rating organizations. CRARA § 4(b)(3), Pub.L. No. 109-291. Hence, subsection (

F) is now found in 15 U.S.C. § 80b-2(a)(l 1)(G). References in this opinion are to the IAA prior to this 2006 amendment. . We refer to brokers and dealers as "broker-dealers” because their different roles are irrelevant for purposes of this appeal. See IAA, 15 U.S.C. §§ 80b-2(a)(3), (a)(7); Securities Exchange Act, 15 U.S.C. §§ 78c(a)(4) (broker), (a)(5) (dealer). . See, e.g., Pub.L. No. 86-507, 74 Stat. 201 (1960); Pub.L. No. 86-624, 74 Stat. 412 (I960); Pub.L. No. 86-750, 74 Stat. 885 (I960); Pub.L. No. 91-547, 84 Stat. 1430, 1433 (1970) (adding § 206A); Pub.L. No. 94-29, 89 Stat. 163 (1975). .

The required disclosure consists of the following statement: Your account is a brokerage account and not an advisory account. Our interests may not always be the same as yours. Please ask us questions to make sure you understand your rights and our obligations to you, including the extent of our obligations ta disclose conflicts of interest and to act in your best interest. We are paid both by you and, sometimes, by people who compensate us based on what you buy. Therefore, our profits, and our salespersons’ compensation, may vary by product and over time.

Section (a)(l)(ii), 70 Fed.Reg. 20,454. . The FPA initially filed a petition in 2004 for review of the 1999 temporary rule. See 69 Fed.Reg. 51,620 n. 4 (Aug. 20, 2004). After the SEC promulgated the final rule on April 12, 2005, FPA again petitioned for review. The court consolidated the petitions by Order of May 11, 2005. . See, e.g., 86 Cong. Rec. S2844-45, 2847 (daily ed. Mar. 14, 1940); 86 Cong Rec. S8843 (daily ed. June 21, 1940); 86 Cong. Rec. H9807, 9809, 9815-16 (daily ed. Aug. 1, 1940); 86 Cong. Rec. S10077 (daily ed. Aug. 8, 1940). .

Very shortly after enactment of the IAA, the SEC advised that any charges directly related to the giving of investment advice would be special compensation. On October 28, 1940, the SEC General Counsel issued an opinion stating: Clause (

C) of

section 202(a)(ll) amounts to a recognition that brokers and dealers commonly give a certain amount of advice to their customers in the course of their regular business, and that it would be inappropriate to bring them within the scope of the Investment Advisers Act merely because of this aspect of their business. On the other hand, that portion of clause (

C) which refers to "special compensation" amounts to an equally clear recognition that a broker or dealer who is specially compensated for the rendition of advice should be considered an investment adviser and not be excluded from the purview of the Act merely because he is also engaged in effecting market transactions in securities. 11 Fed.Reg. 10,996 (Sept. 27, 1946) (reprinting SEC General Counsel opinion letter of October 28, 1940). Thus, any charges "directly related to the giving of advice” would be special compensation. Id. This contemporary

interpretation was reflected as well when the SEC addressed two-tiered pricing arrangements (including a discounted fee arrangement) in 1978: [I]f a broker-dealer has in effect, either formally or informally, two general schedules of fees available to a customer, the lower without investment advice and the higher with investment advice[,] and the difference is primarily attributable to this factor ... the [SEC] would regard the extra charge as “special compensation” for investment advice. 43 Fed.Reg. 19,224, 19,226 (May 4, 1978).

The SEC made clear at the time that "[t]his would be the case even in a situation, currently nonexistent, in which a current ‘full service’ firm implements a 'discount' or ‘execution-only’ service.” Id.; see also Townsend & Assocs., Inc., SEC No-Action Letter, 1994 SEC No-Act. LEXIS 739 (Sept. 21, 1994); Am. Capital Fin. Servs., Inc., SEC No-Action Letter, 1985 SEC No-Act. LEXIS 2209 (Apr. 29, 1985). .

Section 211 (

a) provides: The Commission shall have authority from time to time to make, issue, amend, and rescind such rules and regulations and such orders as are necessary or appropriate to the exercise of the functions and powers conferred upon the Commission elsewhere in this subchapter. For the purposes of its rules or regulations the Commission may classify persons and matters within its jurisdiction and prescribe different requirements for different classes of persons or matters. 15 U.S.C. § 80b-l 1(a).