The Future of Securities Self-Regulation After Alpine

Alpine Securities Corp. v. Financial Industry Regulatory Authority (“Alpine’) raises a challenge to the constitutionality of the structure and regulatory authority of the Financial Industry Regulatory Authority (FINRA) before the U.S. Court of Appeals for the District of Columbia Circuit. Alpine Securities, a brokerage firm, argues that the structure of FINRA violates the U.S. Constitution, particularly the Appointments Clause (Article II, Section 2), and the separation of powers doctrine. The company contends that FINRA, which operates as a self-regulatory organization (SRO), is improperly structured because its disciplinary and regulatory authority is exercised without sufficient oversight by the federal government or the President, who would normally appoint officers exercising such powers.

Alpine's central argument is that FINRA's board members are not appointed by the President, nor are they subject to Senate confirmation, as required by the Appointments Clause and the private non-delegation doctrine for officers of the United States. Alpine contends that, as a private, non-governmental entity, FINRA is composed of individuals who are not accountable to the public or elected officials in the same way that government agencies are. This, Alpine argues, makes its regulatory and enforcement powers unconstitutional. 

FINRA argues, however, that its regulations and enforcement decisions are under close scrutiny by the SEC, and, thus, that this delegation of federal power to it, a private regulator, is constitutionally permissible. FINRA also worries that accepting Alpine’s arguments could bring destabilizing and potentially disastrous consequences to the self-regulatory framework of the markets.

The case involves questions about the balance between public regulatory authority and private self-regulation within the securities industry. The outcome could have significant implications for the structure of SROs like FINRA, which play a key role in regulating the securities industry but operate outside the direct control of the government.

The Corporations, Securities & Antitrust Practice Group of the Federalist Society is pleased to present this FedSoc Forum on the Alpine case.  Join us in discussing the arguments raised in the case and the DC Circuit’s opinion, as well as the implications for securities industry self-regulation going forward.

Featuring:

• Brian Barnes, Partner, Cooper & Kirk PLLC, Lead Counsel for Alpine
• W. Hardy Callcott, Partner, Sidley Austin LLP
• Moderator: Joanne Medero, Former Managing Director, BlackRock Inc.

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To register, click the link above.

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As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker.