FINRA and the Justice Department are pushing back on Alpine Securities’ attempt to elevate its lawsuit against the brokerage regulator to the Supreme Court. FINRA called the firm’s case “legally meritless.”
Both FINRA and the Department of Justice submitted briefs in opposition to Alpine Securities’ petition for a “writ of certiorari,” asking the nation’s highest court to consider the firm’s appeal of its suit in the First Circuit Court of Appeals in Washington, D.C. last year.
Earlier this year, Utah-based broker Alpine Securities asked the Supreme Court to hear its case, arguing that the First Circuit’s decision to allow FINRA’s enforcement case against the firm to continue was not sufficient.
Though Alpine asked the Court to stay FINRA’s action against the firm, Chief Justice John Roberts denied Alpine’s attempt to immediately stop FINRA’s pursuit to expel the firm from the industry. In a statement, a FINRA spokesperson said the Court should deny Alpine’s petition, “just as it denied Alpine’s application to stay the D.C. Circuit’s judgment.”
FINRA initially charged Alpine with misconduct in 2019, alleging the firm mishandled client funds, conducted unauthorized trades, and charged unreasonable fees to clients. Several years later, FINRA expelled the firm from the industry and required it to pay millions in restitution. FINRA later moved to expedite Alpine’s expulsion, charging the firm with defying a cease-and-desist order.
Alpine fought back by challenging FINRA’s constitutionality, claiming the self-regulatory organization’s hearing officers and arbitration panels acted as de facto federal judges and trials that operated outside the oversight of the U.S. government’s executive branch (several brokers have attempted similar cases brewing in other circuits nationwide).
The First Circuit Court of Appeals partially decided in Alpine’s favor, ruling that FINRA cannot expel registrants without allowing SEC review. However, the judges (with one dissent) did not weigh the validity of FINRA’s case against the broker and allowed its enforcement case to continue.
In its plea to the Supreme Court, Alpine argued the firm faced immediate harm if FINRA’s enforcement wasn’t immediately paused. Though Chief Justice Roberts rejected Alpine’s request to stay part of the Court of Appeals decision, FINRA’s existence could hang in the balance if Alpine successfully brings its case to the Supreme Court.
In the briefs, both the DOJ and FINRA argue against Alpine’s constitutionality concerns, and also note that the case isn’t ripe for Supreme Court consideration as there’s no split between Circuit decisions (often, the Court is enticed to take a case if separate courts in the country have come to opposing decisions on similar cases).
Among other points, the DOJ notes in its brief that the Supreme Court is intended as a court of “review, not of first view,” which makes Alpine’s suit unsuitable for the question of FINRA’s constitutionality, as the Court of Appeals explicitly opted not to decide on that question.
Alpine’s attorneys did not return a request for comment prior to publication.
Alpine still faces steep odds against the Court opting to take its case; according to Pew research, the Supreme Court only hears about 80 cases a year out of 7,000 to 8,000 petitions.