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## No. 23-5129 September Term, 2022 1: 23-c v -015 06-BA H Filed O n: July 5, 20 23 Alpine Se curities Corpo ration ,

App ellant Scottsda le Cap ital Ad v isors Corpora tion,

App ellee

v

. Finan cial Ind ustry Reg ulato ry Au tho rity

an d United Sta tes o f

Am erica, App ellees

BEFORE: Hend erson , W alker*, a nd Garcia**, Circuit Jud ges O R D E R Upon con siderat ion o f

the em ergency motio n for injun ction pen ding ap pea l, the opp osition s the reto, an d th e rep ly ; an d th e a dm inistrative stay ente red o n Ju ne 8, 2 023 , it is ORDERED tha t th e a dm inistrative stay be d issolv ed. It is FURTHER ORDERED tha t th e e me rg ency mo tion for injun ction pen ding ap pea l be grant ed and the Finan cial Ind ustry Reg ulato ry Au tho rity

be enjoined f rom cont inuing the expedite d e nforcem entproce edin g against Alp ine S ecurities Corporat ion p end ing f urthe r order o f

the cou rt. Ap pellan t ha s satisf ied t he stringent requirem ent s for an

* A st ate me nt b y

Circuit Jud ge W alker, co ncurring in th is orde r, is att ache d. ** Jud ge Garcia would d eny the em ergency motio n for injun ction pen ding ap pea l.

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## No. 23-5129 September Term, 2022
injunct ion p end ing app eal. Se e W inter v. Natu ral Res. De f . Cou ncil, In c., 5 55 U.S. 7 , 20 (200 8); D.C. Circuit Han dbo ok o f Practice an d In terna l Proced ures 3 3 (20 21).

Per Curiam

FOR THE COURT:

Mark J. La nger, Clerk BY: /s/ Michael C. McGrail Depu ty Cl erk

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## No. 23-5129 September Term, 2022

W A L K E R , Circuit Judg e , con curring: “Becau se th e e ntire ‘execut ive Po we r’

be long s to thePreside nt a lone , it ca n o nly be exercised

by the Preside nt a nd tho se a cting under him.” *
T o b uy and sell secu rities, broke rs mu st register w ith a self-regulatory organiz ation . 1 5 U.S .C. § 78o (a)(1), (b)(1)(B). Self-regulatory organizations a re respo nsible for “enforc[ing] com pliance ” w ith th e “provisions” of the Se curities a nd Exchange Act , an d th e “rules a nd regulation s the reun der.” Id. § 7 8s(g)( 1); see also id

. § 7 8o-3 (b)(7). Alpine Se curities Corpo ration is a se curities b roker. E arlier this year, it foun d itself in tro uble w ith its se lf-regulatoryorganization, the Finan cial Ind ustry Reg ulato ry Aut hority. Believing that Alpine vi olate d a pree x isting cease -and -desist o rder, FINRA brou ght an expedite d e nforcem entactio n se eking to stop Alpin e f rom selling securities. In re spon se, A lpine f iled th is suit, co llaterally attackin g FINRA’s auth orityto cond uct its enforcem entproce edin g. All tha t m ight soun d like a run-of-the-m ill encou nte r w ith th e governme nt. Bu t here ’s the twi st: S elf-regulatoryorganizations a re no t governmen t agen cies. T hey are priv ate corpo ration s respo nsible for regulating secu rities broke rs. Id. § 7 8s(g)( 1). Alpine says FINRA’s enforcem entactio n violates t he Constitu tion beca use FINRA’s hea ring of

f icers imp ermissibly w ield e xecut iv e p ower that ma y be exercised only by the P residen t an d o f f icers un der h is supe rv ision. And it see ks an injun ction pen ding ap pea l to b lock its e x pulsion f rom FINRA—the so-called “corpora te d eat h pen alty” —w hile it a rg ues its case . A pp. 48

. By g rantin g Alpine’s reque st, th e Cou rt prese rv es th e sta tus quo an d a llows f ull consid eratio n o f

Alpin e’s con stitutio nal a rg um ent

. I W e wil l enjo in agen cy

actio n p end ing app eal when the pa rty see king the injunct ion is likely to win on t he me rits, it w ill suf fer irreparab le ha rm without an injunct ion, and the equities a nd pub lic interestfavor our inte rv ent ion. Nken v. Holde r ,

United Sta tes ex rel. Po lansky v. Exe cutive Health Resou rces, In c. , 14 3 S . Ct. * 172 0, 1 741 (202 3) (T hom as, J. , con curring)(clean ed up). Page 3

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## No. 23-5129 September Term, 2022

556 U.S. 418 , 42 6, 4 35 (200 9); see also Jo hn Doe Co . v. CFPB , 84 9 F.3 d 1 129 , 11 31 (D.C. Cir. 2017 ). If Alpin e is likely to succe ed on the m erits, th e o the r boxes are easily checked

. Alpine would suf

fer an irreparab le ha rm without an injunct ion b ecau se th e o ngoing FINRA en forcem entproce edin gs would pu t it o ut o f bu siness. Plus, the resolu tion of claims by an u ncon stitutio nally structured ad judicat or is a “here-an d-no w injury”tha t cann ot la ter b e rem edie d. AxonEn terprise, Inc. v. FTC , 59 8 U.S . 17 5, 1 91 (202 3) (cleane d u p). An injunct ion would a lso be equitab le an d in the pu blic inte rest. T he pub lic intere st favors preventing the de privation of individual rights an d a buse s of governm ent power. SeeNken , 55 6 U.S . at43 6. If Alpin e’s con stitutio nal ch allenge h as m erit, th at is the case he re: Itw ill be “subject[] to a n illegitimat e p rocee ding, led by an illegitima te decision ma ker.” Axon , 59 8 U.S . at19 1. T he intere sts cutting the oth er way are no t as strong. T he pub lic has a n int erest in tim ely enforcem entagainst tho se who violate th e law. Nken , 55 6 U.S . at43 6. But here the on ly

evidence tha t Alp ine has v iolate d th e law is FINRA’s say so. An d if Alpin e is correct o n th e m erits, th en FINRA is an illegitimate de cisionm aker. T hatleaves Alp ine’s likeliho od of succe ss on the m erits. At th is early stage, Alpine ha s raised a se rious a rg um enttha t FINRA im perm issibly exercises significa nt executive power. So the Court is correct to grant a n inju nction prese rv ing Alpine ’s busin ess while it litigates its co nstitu tiona l challen ge. T o b e clea r, “I do no t rule outthe possib ility

tha t f urthe r brief ing and argume nt m ight convince m e th at m y currentvi ew is unfoun ded .” Ritter v. Migliori , 14 2 S . Ct. 1 824 , 18 24 (202 2) (Alito, J., d issentin g) ; see also Me rril

l v. Milligan , 14 2 S . Ct. 8 79, 87 9 (20 22) (Ka v ana ugh, J., con curring)(“[t]o reiterate ,” a vote to st ay is “not a de cision o n th e m erits”). II In o ur system o f

governm ent , th e P residen t alo ne is “v este d” w ith th e “executive Power.” U.S. Con st. a rt. II, § 1

. T o e nsure tha t th e e xecut ive p ower remain s w ith th e P residen t, th e Con stitutio n put s limits o n th ose w ho exercise it on the Preside nt’s b eha lf . A nyone who “w ield[s] significan t executive po wer” mu st be an Of f icer of the United Sta tes. SeeBu ckley v. Vale o , 42 4 U.S . 1, 12 6 (19 76). T hose of f icers mu st gene rally

be rem ovable b y

the Preside nt o r an of

f icer sub ordina te t o th e P residen t. SeeSe ila La w LLC v. CFPB , 140 S. Ct. 21 83, 22 11 (202 0) (principa l of f icers mu st be rem oveable by the P residen t). Page 4

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And the y m ust b e a ppo inted by an a ppro priate gov ernm entbo dy unde r the App ointm ent s Clause . U.S . Con st. a rt. II, § 2 , cl. 2 ; Lucia v. S EC , 13 8 S . Ct. 2 044 , 205 1 (20 18). App ly ing those principle s, th e S upre me Court held tha t Ad min istrativ e L aw Judges with in the SEC were Of f icers of the United Sta tes who m ust b e a ppo inted in accord ance w ith th e A ppo intm ent s Clause

. Lucia , 13 8 S . Ct. a t 20 49. T he ALJs, the Court rea sone d, “e xercised significan t au tho rity” beca use the y ha d “discretio n” to exercise an “impo rtant ” gov ernm entf unct ion—“en forc[ing] th e n ation ’s securities laws.” Id. at 2 049 , 20 51, 20 53 (cleane d u p). T he ALJs could , am ong ot her t hings, de ma nd testim ony, rule o n m otion s, regulate the cou rse of a h earing, d ecide the ad missibility of evidence, an d e nforce co mp liance w ith d iscovery orde rs by punish ing conte mp t. Id. at 205 3. FINRA’s hea ring of f icers are n ear ca rbon cop ies of tho se A LJs. T hey are t asked by statut e with enforcing the na tion’s se curities laws. 15 U.S.C § 78 s(g )(1). T hey can “levy san ctions tha t carry the force o f fede ral law .” Turbeville v. FINRA , 87 4 F.3 d 1 268 , 127 0 (11 th Cir. 2 017 ) (citing 15 U.S. C. § 7 8o-3 (b)(7)). And like Lucia ’s ALJs, he aring of f icers de ma nd testim ony, rule o n m otion s, regulate the cou rse of a h earing, d ecide the ad missibility of

evidence , an d e nforce co mp liance w ith d iscovery orde rs by pun ishing cont em pt. See FINRA Rules 8 210 (Provi sion o f Informa tion and T estim ony), 925 2 (Request s for In forma tion), 923 5 (Hea ring Of f icer Aut hority), 9263 (Evi den ce Adm issibility ), 92 80 (Conte mp tuo us Con duct ). 1
T rue, the SEC ca n review FINRA’s de cisions “on its own m otion , or u pon app lication by any person aggr ieved . . . f iled within thirty days.” 15 U.S .C. § 78s(d )(2). Buttha t do esn’t dif

feren tiate the he aring of f icers f rom Lucia ’s ALJs. T he SEC co uld rev iew the AL Js’ decision s too . Yet t hat“ma [d]e no dif feren ce” to w het her t hey exercised signif icant executive power. Lucia , 13 8 S . Ct. a t 20 54. T he Court em pha siz ed tha t th e S EC “ado pts [ALJs’] credibility fin dings ab sentoverw helm ing evidence to t he cont rary .” Id. (clean ed up). T he stan dard of revi ew is similar here. See Daniel D. Mano ff

, 55 S.E .C. 11 55, n.6 (200 2) (credibility dete rmina tions ma de by NASD—FINRA’s pred ecesso r—“can be overcome on ly w hen the re is ‘sub stan tial evidence’ for do ing so”) (cleane d u p).

T o b e su re, th ere a re som e m inor d if feren ces b etween t he FINRA he aring 1 of f icers an d Lucia ’s ALJs. For e xam ple, the AL Js “adm inister Oa ths.” Lucia , 13 8 S . Ct. at 2 053 . In FINRA he arings, tha t job is lef t to “a co urt rep orter o r not arypu blic.” FINRA Rule 9 262 (Te stimo ny)

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In o the r words, if

the AL Js in Lucia exercised “significan t” executive power, the n FINRA he aring of

f icers prob ably do t oo. Lucia , 13 8 S . Ct. a t 20 51. Does it ma ke a dif

feren ce th at FI NRA he aring of f icers are e mp loyees of a nom inally private corpo ration ? P roba bly not. T hou gh FINRA is priv ate , its e nforcem ent activities are co ntrolled by the gov ernm ent . T he Secu rities Exchange A ct requ ires FINRA to enforce governme nt st and ards, includin g statut oryprovisions an d S EC regulation s. 1 5 U.S .C. § 78s(g)(1). And FINRA’s own rules a re gene rally vetted by the SEC b efore t aking ef

fect. Id. § 7 8s(b)(1). A nd the SEC ca n m odif y the m at a ny time. Id. § 7 8s(c). An d FINRA d oes notenjoy prosecut orial discretio n—ind eed , th e S EC m ay remo ve FINRA’s d irectors an d o f f icers if the y do no t en force governme nt st and ards. Id. §§ 78s(h )(4), 78o -3(b)(7). An d e v en FINRA’s code of proce dure is ap proved b y the SEC. SeeRegu latory No tice 0 8-57 , FINRA (20 08), http s://ww w .f inra.o rg /rulesguidance /no tices/0 8-57 (FINRA an nou nces SEC a ppro v al of its cod e o f

proce dure , am ong ot her t hings). From start t o f inish, FI NRA he aring of f icers execute gov ernm entlaws subject t o a governme nt p lan, w ith little to n o roo m for private con trol. Cf. Man hattan Com m unity Access Corp. v. Halleck, 13 9 S . Ct. 1 921 , 19 28 (201 9) (“a private en tity can qualif y as a state acto r . . . w hen the gov ernm entcom pels t he priv ate en tity to take a p articular action ”). Despite see min g to exercise th e e xecut iv e a uth orityof the United Sta tes, FINRA hea ring of

f icers rem ain p rivate em ployees. T hatprese nts two co nstitu tiona l issues t hat w ill bene f it f rom “f ull brief ing, oral a rg um ent , an d o ur usu al extensive inte rnal delibe ration s.” Merril

l v. Milligan , 14 2 S . Ct. 8 79, 87 9 (20 22) (Ka vana ugh, J., concu rring ). First, FINRA h earing of f icers are n ot a ppo inted by a governmen t bo dy pursu antto the Ap poin tm ent s Clause

. SeeLu cia , 13 8 S . Ct. a t 20 51. Se cond , th ey are shielde d f rom remo v al by the SEC e x ceptfor cau se. 15 U.S.C. § 78 s(h)(4). An d th e Sup reme Court has assum ed tha t th e P residen t m ay not re mo v e S EC Com mission ers at will

. Free E

nte rprise Fun d v. Pub lic Com pan y Acco unt

ing O versight

Bo ard , 56 1 U.S

. 477 , 48 7 (20 10). T hatm ean s tha t th ere a re two layers of rem oval prote ction—o ne for the Com mission ers an d o ne for th e h earing of f icers. T hatm ay well inf ringe on the Preside nt’s “ab ility

to execute the laws . . . b y ho lding his sub ordina tes a ccoun tab le for the ir cond uct.” Id. at 496

. FINRA m ight prevail on t hose issues, bu t on the brief ing before u s, th at se em s unlikely. It would b e o dd if the Const itution proh ibitsCongress f rom v esting signif icant executive power in an un app ointe d a nd unre mo v able governm entad min istrator b ut allow s Congress to vest such power in an un app ointe d a nd unre mo v able private hea ring of

f icer. SeeLu cia , 13 8 S . Ct. a t 20 51; see also Department o f Transp ortat ion Page 6

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v. Asso ciation of Am erican Railroads , 57 5 U.S . 43 , 57 (201 5) (Alito, J., co ncurring) (“The re is good reaso n to thin k tha t th ose w ho have no t sworn an oat h ca nno t exercise significan t au tho rity

of the United Sta tes.”). T o so ho ld cou ld crea te a con stitutio nal lo oph ole. It would su gg est t hat Congress was f ree t o f ix the con stitutio nal in f irmity w ith th e A LJs in Lucia simp ly by mo v ing them ou tside of the Executive Branch . B ut t hatwould n’t cu re th e b asic de fect mo tiv ating th e S upre me Court: Only the Preside nt a nd prop erly ap poin ted Of

f icers of the United Sta tes m ay exercise signif icant executive power. SeeLu cia , 13 8 S . Ct. a t 205 1 (citing Buckley, 42 4 U.S . at12 6). “W hatcan notbe do ne directly canno t be do ne indirectly. T he Constitu tion dea ls w ith su bsta nce, no t sha dows.” Stu den ts fo r Fair Admissi ons, Inc. v. Presiden t an d Fe llows of Ha rvard Colleg e , No. 20-1 199 , slip o p. 3 9 (U.S. Jun e 2 9, 2 023 ) (cleane d u p). T o b e su re, Con gress m ay auth oriz e p rivate organizations t o work w ith gov ernm entregulato rs. For e xam ple, it do es n ot violate the Const itution to let p rivate ent ities m ake recom me nda tions tha t th e governme nt la ter a ppro v es. SeeSu nshin e Ant hraciteCoal Co . v. A dkins , 31 0 U.S . 38 1, 3 99 (194 0). B ut t he hea ring of f icers he re do notjust m ake recom me nda tions—t hey enforce se curities laws and de cide p arties’ rig hts. An d u nless t he losing party app eals t o th e S EC or th e S EC ste ps in unp romp ted , th e h earing of f icers’ decision s are f inal.

*** T here is a se rious a rg um enttha t FINRA h earing of f icers exercise significan t executive power. And it is un dispu ted tha t th ey do n ot a ct un der t he Preside nt. T hat ma y be a co nstitu tiona l prob lem

. SeeU.S. Const. art. II, § 1, cl. 1; id. art. II, § 2, cl. 2. T he Court is right to grant a n inju nction pe ndin g appe al to let A lpine litig ate its case against FI NRA, w ithou t th e a gency first se nte ncing it to the corpo rate dea th pen alty.

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