Judge Brett Kavanaugh addresses the assembled audience in the East Room of the White House moments after President Donald Trump nominated him to be Associate Justice at the U.S. Supreme Court after Justice Anthony Kennedy announced his retirement from the Court. July 9, 2018. Brett Kavanaugh (Photo: Diego M. Radzinschi/ALM)

Twitter was abuzz Tuesday with ruminations that President Donald Trump’s Supreme Court nominee, Brett Kavanaugh, had a hand in the death of the Merrill Lynch Rule a decade ago.

Skip Schweiss, head of advisor advocacy and industry affairs for TD Ameritrade Institutional, tweeted Tuesday that “history is fascinating!” while pointing to a ThinkAdvisor article from 2007 that reported on the Financial Planning Association’s victory in its court battle against the Securities and Exchange Commission.

The three-judge panel of the U.S. Court of Appeals for the D.C. Circuit ruled 2-1 on March 30, 2007, that the SEC lacked the authority to exempt broker-dealers who collect fees as well as commissions from the fiduciary requirements of the Investment Advisers Act of 1940, ThinkAdvisor reported.

The SEC had been trying since 1999 to use a section of the act that permits it to exempt “any other persons not within the intent of this paragraph” from the Investment Adviser Act fiduciary requirements.

“Judge Brett Kavanaugh and Judge Judith Rogers agreed with the FPA, Denver, that another part of the paragraph that refers to brokers and dealers who receive ‘special compensation’ clearly prohibits the SEC from exempting broker-dealers with fee-based compensation arrangements” from the Advisers Act.

Schweiss told ThinkAdvisor on Tuesday that the D.C. Circuit’s 2007 decision in FPA vs. SEC “was a landmark for the advice business.”

The court held that the SEC “had overstepped by allowing brokers to charge fees – ‘special compensation’ – for advice, in violation of the Investment Advisers Act of 1940.”

As ThinkAdvisor’s sister publication The National Law Journal reported Monday night, Kavanaugh was nominated to replace retiring Justice Anthony Kennedy on the U.S. Supreme Court. George W. Bush named Kavanaugh to the D.C. Circuit in 2006.

Duane Thompson, president of Potomac Strategies, a policy consulting firm, who at the time of the lawsuit was managing director of the FPA’s Washington office, told ThinkAdvisor on Tuesday that “it was surprising to see Judge Kavanaugh’s name resurface after all these years. But in reviewing the old FPA decision, it’s easy to see that he narrowly interpreted the law then and, according to news commentators today, continues to take a strict constructionist approach to interpreting federal law.”

In 2007, the FPA ”had no idea whether the three-judge panel would come down favoring the SEC or FPA,” Thompson said. “The court’s opinion revolved around just a couple very short paragraphs in the Advisers Act that clearly restricted broker-dealers from charging special compensation — in other words, fees — for their investment advice unless they were dually registered as investment advisors.”

The split 2-1 opinion by the D.C. Circuit panel — which also included a dissenting vote by Judge Merrick Garland, an Obama nominee to the Supreme Court two years ago — “has had a long-term impact on the broker-dealer business model that continues to reverberate today in the SEC’s latest proposed best-interest standard for brokerage firms,” Thompson continued.

The fiduciary battle has raged on since, with the Labor Department’s long-fought-for fiduciary rule being vacated by the U.S. Court of Appeals for the Fifth Circuit, and the SEC now forging ahead with its own advice standards package.

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