The Financial Industry Regulatory Authority got a bit of good news on Monday, courtesy of the nation's highest court as an order list posted to the U.S. Supreme Court's website on June 2 indicated that Alpine Securities Corp.'s petition for a writ of certiorari in a case challenging FINRA's authority had been denied.
In its Feb. 20 petition, Alpine said the court should grant a review of a lower court's decision in Alpine's case against FINRA in part to consider "whether FINRA's unusual status as the purportedly private enforcer of the federal securities laws violates the Constitution's structural provisions."
FINRA is responsible for examining its members that are municipal securities dealers or municipal advisors and for enforcing Municipal Securities Rulemaking Board rules. Both FINRA and the MSRB, the municipal securities market's principal regulator, are self regulatory organizations.
In its petition, Alpine said FINRA "is a nominally private corporation that acts as a federal government agency." FINRA enforces the federal securities laws as well as its own rules that carry the force of federal law, Alpine said.
In doing so, "FINRA investigates, prosecutes, adjudicates, and punishes individuals and entities" forced to join it in order to do business in the U.S. securities industry, the petition said.
"Based on its unusual status as the purportedly 'private' enforcer of the federal securities laws, FINRA insists that it can exercise enforcement power derived from the government, mandated by the government, and with immunity reserved for the government," Alpine said.
To make matters even worse, FINRA wields government power more freely than the government itself, Alpine's petition said.
"That is, free from the structural constitutional limitations that constrain the government," the petition said.
That Alpine's petition was denied is hardly shocking given that the Supreme Court accepts only about 100 to 150 of the more than 7,000 cases it is asked to review each year.
In a statement Monday, FINRA said it was pleased with the Supreme Court's decision.
"It is FINRA's position that, for multiple reasons discussed in its brief opposing Alpine's petition for writ of certiorari, the case did not meet the Supreme Court's standards for review," the statement said.
Efforts to obtain comment from law firm Cooper & Kirk, counsel for Alpine, were unsuccessful Monday.
