Securities Broker Loses Challenge to FINRA’s Enforcement Power

A securities broker lost his bid to halt a FINRA enforcement action after a federal court in Washington, D.C. said he was unlikely to succeed on claims that the private, self-regulated organization is a “state actor” under the US Constitution.

Eugene H. Kim, who faces claims of alleged ethics violations, argued that that Financial Industry Regulatory Authority Inc. ought to be subject to Article II’s appointment and removal requirements. But being a state actor requires “permanent control by the government,” the US District Court for the District of Columbia said Oct. 6, rejecting Kim’s bid for injunctive relief.

FINRA furthers ...