Not completely crazy. The opinion strikes pretty hard at the power of the industry regulator though, because it prevents FINRA from using the court system to enforce its decisions - a critical power enjoyed by every overseer. The court doesn't identify a workaround either. So how you feel about the case will depend on how you feel about textualism, where a plausible case can be made that the court is onto something vs. context, which matters when a court deprives a regulator of a power it has been happily relying on for over four decades.
On the one hand, FINRA has the power to levy "fines," under the Exchange Act. And you'd think that the power to levy a fine includes the power to enforce such a levy. Moreover, if you sign a contract, the idea is that you can go to court if the other party fails to perform, and the securities industry essentially has contracted with FINRA to police its bad actors, which it does, inter alia, with fines, and which the bad actor in this case refused to pay.
To be traditional about it, the administrative law question presented in the FINRA case is whether the statute is ambiguous on that go-to-court question, and whether, even if so, FINRA, a private entity, is entitled to Chevron deference in interpreting a law that permits it to fine members to permit it to go to court to enforce those fines.
FINRA lost the case because the ability to go to court is something that is a big enough regulatory deal that it is usually spelled out in the statute explicitly. The Exchange Act, for example, has language that permits the SEC to sue explicitly. It doesn't have that language for FINRA, and the court didn't just rely on negative inference, but less plausibly on other limitations on judicial review in the Exchange Act.
The court also concluded that FINRA's own rule permiting it to go to court (state court, problematically, given that the exclusive jurisdiction of the Exchange Act lies in federal court), was illegally promulgated without comment (so it ducked the Chevron issue).
This isn't textualy impossible, but it makes FINRA impossible. You also wouldn't want to set up a regulatory scheme that can't be enforced. And that is what the Court has done - I'm not sure that FINRA can bring a fine action to the SEC, and then to federal court, don't really know how that would work, and the court didn't suggest any answers. FINRA must be able to enforce its fines.
What will happen? I can't imagine it won't go en banc, it is a conservative panel in a pretty liberal appellate court. Fixing this might require congressional legislation, though the SEC could pass a rule authorizing FINRA to sue (that would be a tricky delegation of an important power).
Anyway, those are my preliminary thoughts on a pretty important case.
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