On June 2, 2025, the U.S. Supreme Court declined to hear a challenge brought by a member firm against the enforcement power given to the Financial Industry Regulatory Authority (“FINRA”). The Court’s decision to turn away the petition for certiorari permits FINRA to proceed with an enforcement action against the member firm for allegedly stealing over $54.5 million in customer funds, but because the challenge was presented as part of a petition from a partial denial of a preliminary injunction rather than from a final order, it may not be the last word as to the constitutionality of FINRA’s enforcement powers.
As previously covered, in November 2024 the D.C. Circuit Court of Appeals enjoined FINRA from expelling the firm without Securities and Exchange Commission review, but denied a broader request for a preliminary injunction that would have prevented FINRA from moving forward with its enforcement proceeding in the interim.
Alpine Secs. v. FINRA, No. 23-5129, ECF Doc. No. 2086156 (D.C. Cir. Nov. 22, 2024). Given the posture of the case, the Court of Appeals largely avoided the constitutional challenges against FINRA’s disciplinary program and focused instead on its finding that the member firm would suffer irreparable harm from expulsion because it would essentially force it out of business long before the SEC could review FINRA’s action—which it held would likely violate the private nondelegation doctrine—but would not suffer irreparable harm from being required to respond to the proceeding itself. Even though the member firm won in part, it sought certiorari arguing that the entirety of FINRA’s proceeding should be enjoined. Both FINRA and, notably, the Trump administration, opposed Alpine’s petition. FINRA argued that the non-delegation doctrine does not apply because FINRA is a private, non-governmental entity. The Department of Justice argued that the
Alpine case is the wrong vehicle for the Supreme Court to consider the applicability of Article II, implying that the Trump administration is waiting for the right case to challenge FINRA’s authority.
The decision by the Supreme Court to deny certiorari, while not surprising given the posture of the matter, leaves open the constitutional questions around FINRA’s enforcement powers that have been swirling since
Jarkesy, including a recent Congressional proposal to eliminate FINRA by transferring its authority to the SEC.
