The Supreme Court has denied Alpine Securities’ attempt to have the nation’s highest court review its ongoing case against FINRA, which threatened the brokerage regulator.
The Utah-based broker/dealer originally filed a “writ of certiorari” (a request to hear the case) with the Supreme Court in February to review a decision in Washington D.C.’s Court of Appeals (which offered the firm a partial victory), arguing it should have gone further.
Previously, the Supreme Court denied Alpine’s request to pause FINRA’s ongoing pursuit to expel the firm from the industry, opting to let the D.C. Circuit’s decision stand as they considered whether to take Alpine’s case (which allowed FINRA to continue its enforcement proceedings against Alpine).
In a statement, a FINRA spokesperson said the organization was “pleased” by the Court’s decision not to take the case, arguing that Alpine’s petition “did not meet the Supreme Court’s standards for review.”
Attorneys for Alpine Securities did not respond to a request for comment prior to publication.
The chances that the Court would take the case were always slim to none; according to Pew Research, the Supreme Court only hears about 80 cases a year out of 7,000 to 8,000 petitions. Often, the court will take up a case if there have been splits among different circuits in similar cases (which was not the case here).
FINRA first charged Alpine with misconduct in 2019 and tried to expel the firm for mishandling client funds and conducting unauthorized trades. FINRA later tried to expedite the expulsion, claiming Alpine continued with its misconduct despite the ruling.
Alpine responded by challenging FINRA’s constitutionality in a lawsuit, claiming its hearing officers and arbitration panels acted as de facto judges and trials operating outside the oversight of the U.S. government’s executive branch (other brokers have made similar arguments in lawsuits nationwide).
Alpine’s case eventually made it to the First Circuit Court of Appeals in Washington, D.C., which partially ruled in the firm’s favor last November. The three-judge panel ruled FINRA could not expel registrants without SEC review, though the judges did not opine on FINRA’s case against Alpine and allowed the regulator to continue its enforcement proceedings.
However, Alpine asked the court to reconsider the decision, asking judges to decide “whether FINRA’s structure and asserted power to enforce the federal laws, including its exercise of unfettered prosecutorial discretion, violates the Constitution’s structural provisions.”
Both FINRA and the Justice Department filed responses of their own, with the SRO calling the claims “legally meritless” and arguing the case wasn’t ripe for Supreme Court consideration. In denying writs like Alpine’s petition, the Court does not have to explain its reasoning behind rejecting a case.
But that doesn’t mean that FINRA is out of the woods, according to Ben Edwards, a professor at the William S. Boyd School of Law at the University of Nevada, Las Vegas.
“If a circuit split develops or a Circuit decision substantially interferes with (self-regulatory operations), I’d expect the Supreme Court to take the case,” he said.