Alpine Securities Corp. urged a federal court in Utah to stop a virtual FINRA disciplinary hearing from going forward, saying the regulator already got to present its evidence in person against the broker-dealer before the pandemic began.
The coronavirus pandemic postponed part of a hearing over whether Alpine charged unreasonable or excessive fees. The parties agreed to resume in person, but the Financial Industry Regulatory Authority’s chief hearings officer ordered proceedings to resume over Zoom, Alpine says in a complaint filed in the U.S. District Court for the District of Utah.
The disciplinary proceeding started in February, and FINRA’s enforcement department had the chance to “present six of its witnesses, including its key witness and documentary evidence,” in person, the complaint says. “Alpine was able to present only one” before an “urgent personal matter” affecting its counsel led to an adjournment.
The parties planned to pick things back up in April, but the pandemic got in the way. They most recently agreed to resume the proceedings in person Nov. 30, only for the Zoom directive to come down Nov. 2, the firm says.
Alpine’s membership agreement with FINRA entitles it to in-person hearings and fair procedures, and a remote and virtual proceeding—after the enforcement team already had the chance to present its case in public—is neither, the complaint says.
The change also allegedly violates Alpine’s constitutional due process rights.
A Zoom hearing on Alpine’s preliminary injunction request is set for Nov. 24.
Causes of Action: Breach of contract; due process violations; declaratory judgments.
Relief: Injunction preventing FINRA from conducting the rest of the hearing over Zoom.
Response: FINRA doesn’t comment on pending litigation, a representative told Bloomberg Law Thursday.
Attorneys: Parsons Behle & Latimer represents Alpine.
The case is Alpine Sec. Corp. v. Fin. Indus. Regulatory Auth., D. Utah, No. 20-cv-00794, complaint filed 11/10/20.
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