FINRA Powers Could Shrivel Under New Legal Challenge

By Ed Beeson (March 24, 2016, 10:19 PM EDT) -- The Financial Industry Regulatory Authority's oversight of the brokerage industry faces a potentially life-altering challenge as a new lawsuit claims the Wall Street-funded regulator has been enforcing securities laws that it was never given congressional authority to police.

The lawsuit brought Tuesday by Scottsdale Capital Advisors Corp. and three of its top officials asks a Maryland federal court to freeze a fast-approaching disciplinary hearing against them on the grounds that FINRA did not have legal authority to bring the enforcement action in the first place.

Specifically, the plaintiffs argue that FINRA's disciplinary powers are limited to enforcing the Securities Exchange Act...

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