A Utah-based broker-dealer lost a court case seeking to postpone Financial Industry Regulatory Authority disciplinary hearings until they can be held in person.
In November 2020, Alpine Securities filed a lawsuit against Finra, taking issue with the self-regulator’s decision to proceed with hearings via Zoom in relation to a 2019 disciplinary action against Alpine. Finra alleged that Alpine has "stolen millions of dollars from its customers' and has violated its rules by, among other things, charging "excessive, unreasonable, and arbitrary" fees.
Earlier this week, District Judge David Barlow dismissed Alpine’s suit with prejudice, ordering the company and Finra to cover their own costs and lawyers’ fees, according to court documents.
Alpine had claimed that it was entitled to in-person hearings, per Finra’s rules, which proceeded to start on Feb. 18, 2020, according to the lawsuit filed in the U.S. District Court for the District of Utah, Central Division. The proceedings, however, had to be adjourned on Feb. 22, 2020, “due to an urgent personal matter affecting Alpine’s counsel,” the lawsuit claimed.
The parties agreed to postpone the in-person hearing to April 2020, which became impossible because of the Covid-19 pandemic, according to Alpine.
And while the parties again agreed to proceed with in-person hearings in November 2020, chief hearing officer Maureen Delaney of Finra’s Office of Hearing Officers ordered on November 2 for the rest of the hearings to take place on November 30 virtually over Zoom, pursuant to a temporary rule Finra adopted on virtual hearings in August 2020, according to the lawsuit.
Alpine claims that Delaney’s order “was a completely generic directive, devoid of any acknowledgement of the extensive discussions that have occurred on the issue,” as well as a breach of Finra’s agreement with Alpine about the in-person hearings, failure to “to provide Alpine a “fair procedure” in disciplinary proceedings” and a violation of Alpine’s right to due process.
Alpine sought injunctive relief in the form of a preliminary and permanent injunction that would force Finra to postpone the hearing until it could be conducted in person.
In August 2021, Finra filed an opposition to the motion for preliminary injunction, on the grounds that the district court lacks jurisdiction toconsider the matter and because Finra is “absolutely immune from suit for the improper performance of regulatory, adjudicatory, or prosecutorial duties.”
In addition, Finra argued that Alpine would not be “irreparably harmed” if it had to present evidence and testimony remotely, according to court documents.
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