The Supreme Court has decided not to stop the Financial Industry Regulatory Authority’s attempt to expel Alpine Securities, WealthManagement reports.
Chief Justice John Roberts denied Alpine’s request to stop the disciplinary proceeding, while the Supreme Court considers whether to hear the firm’s appeal of a lower court ruling that allowed FINRA’s action to move forward.
FINRA decided to expel Alpine Securities in 2022, alleging the firm converted and misused customer funds and securities, engaged in unauthorized trading, charged customers unfair prices in securities transactions and unreasonable fees, and made an unauthorized capital withdrawal. Alpine, a broker-dealer based in Utah, was also ordered to pay $2.3 million in restitution.
The U.S. Court of Appeals for the District of Columbia Circuit then upheld a preliminary injunction that allowed Alpine Securities to continue to operate while appealing FINRA’s decision to bar the firm from the financial industry.
In its Supreme Court appeal, Alpine said it faced irreparable harm from having to defend itself in FINRA’s enforcement proceeding, which it called unconstitutional. Alpine has challenged the constitutionality of FINRA by claiming its disciplinary hearing officers were not properly appointed by the executive branch.
In its decision last November, the D.C. Appeals Court partially agreed with Alpine, saying FINRA likely lacks the power to unilaterally expel brokerages for misconduct on an expedited basis without the Securities and Exchange Commission reviewing its decisions first.
As the case went to the Supreme Court, the government contended that Alpine had not met the threshold for granting a stay of FINRA’s enforcement action, and that both the government and the public would be harmed if the high court stopped the proceedings.
“There is a strong congressional and public interest in ensuring that securities markets remain trustworthy and sound, including by ensuring that those markets remain free of those who repeatedly violate not just the federal securities laws, but also longstanding industry rules that protect customers and investors,” the response read.
FINRA declined a request to comment. Attorneys for Alpine Securities did not respond prior to the article’s publication.
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