Are You Out Of Luck When Dealing with The SEC and FINRA?

It's no secret how big and expansive government has become over the last several years. Quasi governmental agencies like the Securities and Exchange Commission ("SEC"), and by extension FINRA have grown in influence and power like never before, and, importantly, are beyond approach.

That is to say, if you disagree with their tactics and adjudications, or feel they have wronged your client from a constitutional, or private tort perspective you are out of luck.

We tried to get some form of justice for a client going all the way from the Federal Court Southern District New York, to the Court of Appeals Second Circuit, and then on to the Supreme Court of the United States with no positive results -- total immunity ruled for these agencies. 

Although circuit courts across the country are split with respect to his issue, and even in Washington their is a ground-swell of Senators who feel these agencies need a bit of "reigning in".

It is always a dangerous proposition to give any quasi-governmental agency (or government) absolute immunity - unjust and bad things can happen.This is not an indictment on these agencies since they exist to ensure market integrity, prevent financial fraud and ensure sound policies and procedures associated with its Firm members.

That said, the SEC did drop the ball on a litany of financial fraud cases over the years including the Madoff debacle. 

In this case, the SEC despite approximately six audits gave this group a clean bill of health--we all know the outcome of that. Bottom line, these agencies need some form of accountability, and not absolute immunity that, quite frankly, exceeds the immunity offered to states under the 11th amendment.

A form of "checks and balances" is a sin qua non for any governmental entity -- and these so called SRO's (Self-Regulatory Agencies) should not be accorded treatment that is any different.


We dedicate a portion of our practice to clients needing representation in these areas with these agencies, it never amazes us what we see on a daily basis.