Finra Dealt Blow by Court in Its Power to Expel Brokerages (1)

The financial industry’s self-regulator likely doesn’t have the authority to “unilaterally” expel brokerages it claims have engaged in misconduct, a federal appeals court ruled, in a case that Wall Street is watching closely.

The Financial Industry Regulatory Authority must let the US Securities and Exchange Commission weigh in before it can cast out one of its members, a three-judge panel of the US Court of Appeals for the District of Columbia found. The law requires that Finra’s regulatory role be supervised by a government actor, US Circuit Judge Patricia Millett wrote in an opinion filed on Friday.

The decision calls ...