4th Circ. Says FINRA Challenge Must Go To SEC First

Law360, New York (December 20, 2016, 5:54 PM EST) -- The Fourth Circuit on Tuesday found microcap broker-dealer Scottsdale Capital Advisors Corp. can’t challenge the Financial Industry Regulatory Authority’s power in federal court, because Congress gave exclusive review of FINRA rules and decisions to the U.S. Securities and Exchange Commission.

The three-judge panel affirmed a Maryland federal judge’s decision dismissing Scottsdale’s challenge to FINRA’s authority to bring Securities Act charges, finding Scottsdale must first raise its claims in a FINRA disciplinary proceeding alleging it conducted unethical trades, then appeal to the SEC if the case doesn’t go its way.

“Congress unambiguously channeled Scottsdale’s claim — whether FINRA has exceeded its authority...

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