In Reversal, Second Circuit Rules FINRA Not Authorized to Collect Disciplinary Fines

The U.S. Court of Appeals for the Second Circuit dealt the Financial Industry Regulatory Authority a major setback Oct. 5 in its decade-long effort to collect a $1 million penalty from a brokerage firm and its principal, saying the self-regulatory organization lacks authority to sue to collect disciplinary fines (Fiero v. FINRA).

Reversing the lower court, Judge Ralph K. Winter Jr. concluded that Congress “did not intend to empower FINRA to bring judicial actions to enforce its fines.”

Bear Raid.

In 1998, FINRA’s predecessor, NASD, commenced disciplinary proceedings against Fiero Brothers Inc. and John Fiero for violating NASD ...