Legal Threats to Wall Street’s Self-Regulators May Upend Markets

Looming circuit court rulings on the constitutionality of FINRA and other Wall Street self-regulatory groups have attorneys and law professors concerned about a potential shock to the American securities trading system if the bodies that police the market are rendered powerless.

The clashes over those self-regulatory organizations, some little known outside the financial industry, are playing out in the shadow of US Supreme Court cases over the power of government agencies. A ruling is expected soon in one of the agency cases, SEC v. Jarkesy, on the Securities and Exchange Commission’s use of in-house judges, known as administrative law ...