High Court Won’t Hear Microcap Dealer’s FINRA Challenge
On Monday, the U.S. Supreme Court declined to review a Fourth Circuit decision that microcap broker-dealer Scottsdale Capital Advisors Corp. must challenge the Financial Industry Regulatory Authority’s (FINRA) power before the agency and the U.S. Securities and Exchange Commission (SEC) instead of in federal court.
Scottsdale Capital Advisors is challenging FINRA’s ability to act as a securities regulator by stating it does not truly have a Congressional mandate to wield such power. The lawsuit is in response to proceedings pertaining to an enforcement action by FINRA against Scottsdale regarding sales of un-registered securities.
In recent years, questions have been raised as to FINRA’s decision to operate like a government agency without government oversight. Unlike the SEC, which must report to Congress and submit a budget, FINRA has no such requirement while acting as an enforcement agency for financial firms.