FINRA Challenge Faces Appeals Court Test of ‘State Actor’ Label

A battle over the Financial Industry Regulatory Authority’s constitutionality will shift from a district court to the D.C. Circuit while the latter examines whether the regulator is a “state actor” improperly operating without presidential oversight.

“By ordering briefing on the merits, the D.C. Circuit has announced its intention to consider and resolve that question on appeal,” Judge Beryl A. Howell said Wednesday for the US District Court for the District of Columbia. Howell also pointed to two brokerage firms’ other constitutional claims that would be affected by whether FINRA is a state actor.

Scottsdale Capital Advisors Corp. and Alpine Securities ...