Finra’s Legal Immunity Won’t Be Questioned by U.S. High Court
The U.S. Supreme Court refused to question the legal immunity of the Financial Industry Regulatory Authority and other private organizations that oversee the country’s financial markets.
The justices today rejected an appeal from a securities firm that accused Finra, as the brokerage-industry oversight body is known, of misleading members about the potential cost to them of its 2007 merger with the New York Stock Exchange’s oversight unit.
The suit by Standard Investment Chartered Inc. also named current and former Finra officers, including Mary Schapiro, now the chairman of the Securities and Exchange Commission.
The suit centered on the proxy solicitation Finra issued in 2006 to change its bylaws to match those of the NYSE. Finra was known as the National Association of Securities Dealers at the time.
Standard Investment argued in its appeal that so-called self-regulatory organizations are entitled to immunity only when they are directly performing a duty on behalf of the government. In throwing out the suit, a federal appeals court in New York said those organizations also are immune for actions they take “incident to” their regulatory functions.
Finra is one of more than 30 self-regulatory organizations registered with the SEC. Standard Investment is based in Costa Mesa, California.
The case is Standard Investment Chartered v. National Association of Securities Dealers, 11-381.
To contact the reporter on this story: Greg Stohr in Washington at email@example.com.