SEC v. Chenery Corporation, 318 U.S. 80, 87, 63 S.Ct. 454, 87 L.Ed. 626 (1943) stands for the proposition that a reviewing court may not affirm an agency decision based on reasoning that the agency itself never considered in its administrative proceedings. In Chenery, managers of the Federal Water Service Corporation ("Federal") sought approval of a corporate reorganization plan by the Securities and Exchange Commission ("SEC"). Chenery, 318 U.S. at 82, 63 S.Ct. 454. The plan provided that the company's class B common stock would be surrendered for cancellation, and that its preferred and class A common stock would be converted into common stock of a new corporation. Id. at 84, 63 S.Ct. 454. While the plan was pending, several officers, directors, and controlling stockholders of Federal (collectively, "respondents") purchased over 12,000 shares of preferred stock in the new company. Id. Aware of this development, the SEC approved of Federal's reorganization plan only upon the condition that the preferred stock that the respondents acquired would not be permitted to share on parity with other preferred stock, reasoning that respondents, as managers of Federal, were fiduciaries who were obligated under their "duty of fair dealing" to refrain from trading in the securities of the corporation while the reorganization plan was pending. Id. at 85, 63 S.Ct. 454. In reaching this conclusion, the SEC's "opinion plainly showed that . . . its decision . . . was explicitly based upon the applicability of principles of equity announced by courts." Id. at 87, 63 S.Ct. 454. The respondents then challenged the SEC's conditional approval of the reorganization plan in federal court. On appeal, the SEC defended its decision under the court-announced equitable principles. Id. at 88-89, 63 S.Ct. 454. Additionally, however, it offered an alternative justification for its decision: even if the court declined to uphold its decision on equitable grounds, "the order should nevertheless be sustained because the effect of trading by management is not measured by the fairness of individual transactions between buyer and seller, but by its relation to the timing and dynamics of the reorganization which the management itself initiates and so largely controls." Id. at 90, 63 S.Ct. 454. In addressing the SEC's arguments, the Court first rejected its reliance upon principles of equity, concluding that, contrary to the SEC's determination, "courts do not impose upon officers and directors of a corporation any fiduciary duty to its stockholders which precludes them, merely because they are officers and directors, from buying and selling the corporation's stock." Id. at 88, 63 S.Ct. 454. Next, the Court suggested that the SEC's alternative argument potentially could have supported its decision. Id. 90-92, 63 S.Ct. 454. However, it explicitly declined to consider the merits of that argument, concluding that the SEC's "action must be judged by the standards which the Commission itself invoked." Id. at 89, 63 S.Ct. 454. Because the SEC's alternative argument was not "that upon which its action was based," the Court held that its decision could not be sustained on that ground. Id. at 92, 63 S.Ct. 454.