FINRA Faces Third Constitutional Suit Over Enforcement Power (1)

A Financial Industry Regulatory Authority enforcement action against a securities broker should be halted because the private regulator’s procedures and structure are unconstitutional, the broker alleges, echoing two previous lawsuits.

FINRA’s Department of Enforcement and its hearing officers operate in violation of the US Constitution’s appointments clause, separation of powers doctrine, right to a jury trial, right against self-incrimination, and right to due process, Sydney Lebental says. He filed his suit Wednesday in the US District Court for the District of Columbia.

Lebental’s suit follows in the footsteps of two cases that have reached the D.C. Circuit. In the first ...