On June 2, 2025, the U.S. Supreme Court denied a petition for writ of certiorari filed by Alpine Securities Corp. in Alpine Securities Corp. v. Financial Industry Regulatory Authority. In doing so, the Supreme Court declined to hear Alpine’s constitutional challenges, which sought to enjoin FINRA’s expedited enforcement proceeding against it. The denial of certiorari means that FINRA’s authority to operate as a self-regulatory organization (SRO) and bring regulatory enforcement actions remains unscathed.
Background
Alpine is a Salt Lake City-based broker-dealer facing an enforcement action from FINRA. FINRA alleged that Alpine misappropriated more than $54.5 million from customers through excessive fees and misuse of funds and sought to expel Alpine from FINRA membership. In response to these allegations, Alpine challenged FINRA’s authority and argued that its enforcement powers as a private entity violated the Constitution’s nondelegation doctrine. The nondelegation doctrine limits the delegation of federal powers by Congress-established federal agencies to private non-governmental entities, such as FINRA.
Legal Proceedings
In 2022, Alpine achieved a narrow win from the U.S. Court of Appeals for the District of Columbia Circuit. The D.C. Circuit held that FINRA cannot unilaterally expel a member firm before the Securities and Exchange Commission has a chance to conduct an appellate review of the merits of FINRA’s decision. The appeals court, however, declined to enjoin the expedited enforcement proceeding or address Alpine’s principal constitutional challenges. Alpine then filed a petition for writ of certiorari before the Supreme Court.
Both FINRA and, interestingly, the Trump administration, opposed Alpine’s petition, albeit for different reasons. FINRA extensively argued, among other things, that Article II did not apply because FINRA is a private, non-governmental entity. The Department of Justice’s opposition, however, did not mirror this position or otherwise defend FINRA’s structure. Instead, the DOJ focused on whether Alpine was the right case for the Supreme Court to consider the applicability of Article II and concluded that it was “an especially poor vehicle for review.” As such, it appears that the Trump administration is waiting for the “right” case to express its substantive views regarding FINRA and Article II — consistent with its broader approach, exemplified by its withdrawal of support for the constitutionality of SEC administrative law judges and its issuance of an executive order on agency accountability.
Implications
On balance, the denial of Alpine’s petition for writ of certiorari is a significant victory for FINRA — at least for the time being. Each of the petitioner’s constitutional challenges had the potential to negatively impact not only FINRA’s enforcement program but also its very ability to operate as an SRO. As a result of the denial of this petition, FINRA’s current structure remains intact, albeit FINRA must provide for SEC review of expulsion orders prior to the orders taking effect.
