Finra ‘looks forward’ to defending enforcement authority in court
A Washington, D.C., federal court this week prevented Finra from expelling a brokerage it found to have harmed customers, but the regulator is confident it can defend its enforcement authority in that case and a separate one that was filed earlier this month.
Tuesday, the U.S. Court of Appeals for the D.C. Circuit upheld a preliminary injunction against the Financial Industry Regulatory Authority Inc. that allows Alpine Securities Corp. to continue to conduct business while it appeals a March 2022 Finra decision barring the firm from the financial industry.
Finra claimed Alpine misused customer funds and securities, charged unreasonable fees and engaged in unauthorized trading and capital withdrawal. The broker-dealer self-regulator ordered Alpine to pay $2.3 million in restitution to customers and issued a permanent cease-and-desist order.
A three-judge panel of the D.C. court issued the preliminary injunction against Finra on July 5. Judge Justin Walker, who was in the majority on the 2-1 decision, responded favorably to Alpine’s assertion that Finra violated the Constitution because its disciplinary hearing officers weren’t properly appointed by the executive branch.
“At this early stage, Alpine has raised a serious argument that Finra impermissibly exercises significant executive power,” Walker wrote.
Finra filed a motion to lift the injunction, which the court denied Tuesday.
“While disappointed with the decision on this motion, Finra looks forward to the D.C. Circuit’s consideration of plaintiffs’ appeal, when Finra and the United States Government will present their defenses to plaintiffs’ novel and unsupported constitutional arguments,” Finra said in a statement through spokesperson Ray Pellecchia.
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