Barry Temkin, Mound Cotton Wollan & Greengrass
There are multiple constitutional challenges pending in the federal courts that threaten to upend the administrative procedure for disciplinary actions before the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
In 1934, Congress created the SEC to regulate the securities industry. In 1938, the Maloney Act delegated some of the SEC’s regulatory authority to self-regulatory organizations comprised of industry member firms (SROs). The Maloney Act created the National Association of Securities Dealers, which regulated its member firms until its merger with NYSE Regulation in 2007. That merger created FINRA. For the past eighty-five years, the securities industry has been regulated by the SEC and designated SROs under its supervision. But that system is changing.
