United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

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No. 23-5129 September Term, 2022

1:23-cv-01506-BAH

Filed On: July 5, 2023

Alpine Securities Corporation,

Appellant

Scottsdale Capital Advisors Corporation,

Appellee

v.

Financial Industry Regulatory Authority and

United States of America,

Appellees

BEFORE: Henderson, Walker*, and Garcia**, Circuit Judges

O R D E R

Upon consideration of the emergency motion for injunction pending appeal, the

oppositions thereto, and the reply; and the administrative stay entered on June 8, 2023,

it is

ORDERED that the administrative stay be dissolved. It is

FURTHER ORDERED that the emergency motion for injunction pending appeal

be granted and the Financial Industry Regulatory Authority be enjoined from continuing

the expedited enforcement proceeding against Alpine Securities Corporation pending

further order of the court. Appellant has satisfied the stringent requirements for an

* A statement by Circuit Judge Walker, concurring in this order, is attached.

** Judge Garcia would deny the emergency motion for injunction pending appeal.
United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

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No. 23-5129 September Term, 2022

injunction pending appeal. See Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7,

20 (2008); D.C. Circuit Handbook of Practice and Internal Procedures 33 (2021).

Per Curiam

FOR THE COURT:

Mark J. Langer, Clerk 

BY: /s/

Michael C. McGrail 

Deputy Clerk

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

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No. 23-5129 September Term, 2022

WALKER, Circuit Judge, concurring:

“Because the entire ‘executive Power’ belongs to the President alone, it can only be

exercised by the President and those acting under him.”*

To buy and sell securities, brokers must register with a self-regulatory

organization. 15 U.S.C. § 78o(a)(1), (b)(1)(B). Self-regulatory organizations are

responsible for “enforc[ing] compliance” with the “provisions” of the Securities and

Exchange Act, and the “rules and regulations thereunder.” Id. § 78s(g)(1); see also id.

§ 78o-3(b)(7).

Alpine Securities Corporation is a securities broker. Earlier this year, it found

itself in trouble with its self-regulatory organization, the Financial Industry Regulatory

Authority. Believing that Alpine violated a preexisting cease-and-desist order, FINRA

brought an expedited enforcement action seeking to stop Alpine from selling securities. 

In response, Alpine filed this suit, collaterally attacking FINRA’s authority to conduct its

enforcement proceeding.

All that might sound like a run-of-the-mill encounter with the government. But

here’s the twist: Self-regulatory organizations are not government agencies. They are

private corporations responsible for regulating securities brokers. Id. § 78s(g)(1).

Alpine says FINRA’s enforcement action violates the Constitution because

FINRA’s hearing officers impermissibly wield executive power that may be exercised

only by the President and officers under his supervision. And it seeks an injunction

pending appeal to block its expulsion from FINRA—the so-called “corporate death

penalty”—while it argues its case. App. 48.

By granting Alpine’s request, the Court preserves the status quo and allows full

consideration of Alpine’s constitutional argument.

I

We will enjoin agency action pending appeal when the party seeking the

injunction is likely to win on the merits, it will suffer irreparable harm without an

injunction, and the equities and public interest favor our intervention. Nken v. Holder,

United States ex rel. Polansky v. Executive Health Resources, Inc., 143 S. Ct. *

1720, 1741 (2023) (Thomas, J., concurring) (cleaned up).

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

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No. 23-5129 September Term, 2022

556 U.S. 418, 426, 435 (2009); see also John Doe Co. v. CFPB, 849 F.3d 1129, 1131

(D.C. Cir. 2017).

If Alpine is likely to succeed on the merits, the other boxes are easily checked. 

Alpine would suffer an irreparable harm without an injunction because the ongoing

FINRA enforcement proceedings would put it out of business. Plus, the resolution of

claims by an unconstitutionally structured adjudicator is a “here-and-now injury” that

cannot later be remedied. Axon Enterprise, Inc. v. FTC, 598 U.S. 175, 191 (2023)

(cleaned up).

An injunction would also be equitable and in the public interest. The public

interest favors preventing the deprivation of individual rights and abuses of government

power. See Nken, 556 U.S. at 436. If Alpine’s constitutional challenge has merit, that

is the case here: It will be “subject[] to an illegitimate proceeding, led by an illegitimate

decisionmaker.” Axon, 598 U.S. at 191.

The interests cutting the other way are not as strong. The public has an interest

in timely enforcement against those who violate the law. Nken, 556 U.S. at 436. But

here the only evidence that Alpine has violated the law is FINRA’s say so. And if Alpine

is correct on the merits, then FINRA is an illegitimate decisionmaker.

That leaves Alpine’s likelihood of success on the merits. At this early stage,

Alpine has raised a serious argument that FINRA impermissibly exercises significant

executive power. So the Court is correct to grant an injunction preserving Alpine’s

business while it litigates its constitutional challenge. To be clear, “I do not rule out the

possibility that further briefing and argument might convince me that my current view is

unfounded.” Ritter v. Migliori, 142 S. Ct. 1824, 1824 (2022) (Alito, J., dissenting); see

also Merrill v. Milligan, 142 S. Ct. 879, 879 (2022) (Kavanaugh, J., concurring) (“[t]o

reiterate,” a vote to stay is “not a decision on the merits”).

II

In our system of government, the President alone is “vested” with the “executive

Power.” U.S. Const. art. II, § 1.

To ensure that the executive power remains with the President, the Constitution

puts limits on those who exercise it on the President’s behalf. Anyone who “wield[s]

significant executive power” must be an Officer of the United States. See Buckley v.

Valeo, 424 U.S. 1, 126 (1976). Those officers must generally be removable by the

President or an officer subordinate to the President. See Seila Law LLC v. CFPB,

140 S. Ct. 2183, 2211 (2020) (principal officers must be removeable by the President). 

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No. 23-5129 September Term, 2022

And they must be appointed by an appropriate government body under the

Appointments Clause. U.S. Const. art. II, § 2, cl. 2; Lucia v. SEC, 138 S. Ct. 2044,

2051 (2018).

Applying those principles, the Supreme Court held that Administrative Law

Judges within the SEC were Officers of the United States who must be appointed in

accordance with the Appointments Clause. Lucia, 138 S. Ct. at 2049. The ALJs, the

Court reasoned, “exercised significant authority” because they had “discretion” to

exercise an “important” government function—“enforc[ing] the nation’s securities laws.” 

Id. at 2049, 2051, 2053 (cleaned up). The ALJs could, among other things, demand

testimony, rule on motions, regulate the course of a hearing, decide the admissibility of

evidence, and enforce compliance with discovery orders by punishing contempt. Id. at

2053.

FINRA’s hearing officers are near carbon copies of those ALJs. They are tasked

by statute with enforcing the nation’s securities laws. 15 U.S.C § 78s(g)(1). They can

“levy sanctions that carry the force of federal law.” Turbeville v. FINRA, 874 F.3d 1268,

1270 (11th Cir. 2017) (citing 15 U.S.C. § 78o-3(b)(7)). And like Lucia’s ALJs, hearing

officers demand testimony, rule on motions, regulate the course of a hearing, decide

the admissibility of evidence, and enforce compliance with discovery orders by

punishing contempt. See FINRA Rules 8210 (Provision of Information and Testimony),

9252 (Requests for Information), 9235 (Hearing Officer Authority), 9263 (Evidence

Admissibility), 9280 (Contemptuous Conduct).1

True, the SEC can review FINRA’s decisions “on its own motion, or upon

application by any person aggrieved . . . filed within thirty days.” 15 U.S.C. § 78s(d)(2). 

But that doesn’t differentiate the hearing officers from Lucia’s ALJs. The SEC could

review the ALJs’ decisions too. Yet that “ma[d]e no difference” to whether they

exercised significant executive power. Lucia, 138 S. Ct. at 2054. The Court

emphasized that the SEC “adopts [ALJs’] credibility findings absent overwhelming

evidence to the contrary.” Id. (cleaned up). The standard of review is similar here. See

Daniel D. Manoff, 55 S.E.C. 1155, n.6 (2002) (credibility determinations made by

NASD—FINRA’s predecessor—“can be overcome only when there is ‘substantial

evidence’ for doing so”) (cleaned up).

 To be sure, there are some minor differences between the FINRA hearing 1

officers and Lucia’s ALJs. For example, the ALJs “administer Oaths.” Lucia, 138 S. Ct.

at 2053. In FINRA hearings, that job is left to “a court reporter or notary public.” FINRA

Rule 9262 (Testimony).

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No. 23-5129 September Term, 2022

In other words, if the ALJs in Lucia exercised “significant” executive power, then

FINRA hearing officers probably do too. Lucia, 138 S. Ct. at 2051.

Does it make a difference that FINRA hearing officers are employees of a

nominally private corporation? Probably not. Though FINRA is private, its enforcement

activities are controlled by the government. The Securities Exchange Act requires

FINRA to enforce government standards, including statutory provisions and SEC

regulations. 15 U.S.C. § 78s(g)(1). And FINRA’s own rules are generally vetted by the

SEC before taking effect. Id. § 78s(b)(1). And the SEC can modify them at any time.

Id. § 78s(c). And FINRA does not enjoy prosecutorial discretion—indeed, the SEC may

remove FINRA’s directors and officers if they do not enforce government standards. Id.

§§ 78s(h)(4), 78o-3(b)(7). And even FINRA’s code of procedure is approved by the

SEC. See Regulatory Notice 08-57, FINRA (2008), https://www.finra.org/rulesguidance/notices/08-57 (FINRA announces SEC approval of its code of procedure,

among other things).

From start to finish, FINRA hearing officers execute government laws subject to

a government plan, with little to no room for private control. Cf. Manhattan Community

Access Corp. v. Halleck, 139 S. Ct. 1921, 1928 (2019) (“a private entity can qualify as a

state actor . . . when the government compels the private entity to take a particular

action”).

Despite seeming to exercise the executive authority of the United States, FINRA

hearing officers remain private employees. That presents two constitutional issues that

will benefit from “full briefing, oral argument, and our usual extensive internal

deliberations.” Merrill v. Milligan, 142 S. Ct. 879, 879 (2022) (Kavanaugh, J.,

concurring). First, FINRA hearing officers are not appointed by a government body

pursuant to the Appointments Clause. See Lucia, 138 S. Ct. at 2051. Second, they are

shielded from removal by the SEC except for cause. 15 U.S.C. § 78s(h)(4). And the

Supreme Court has assumed that the President may not remove SEC Commissioners

at will. Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U.S.

477, 487 (2010). That means that there are two layers of removal protection—one for

the Commissioners and one for the hearing officers. That may well infringe on the

President’s “ability to execute the laws . . . by holding his subordinates accountable for

their conduct.” Id. at 496.

FINRA might prevail on those issues, but on the briefing before us, that seems

unlikely. It would be odd if the Constitution prohibits Congress from vesting significant

executive power in an unappointed and unremovable government administrator but

allows Congress to vest such power in an unappointed and unremovable private

hearing officer. See Lucia, 138 S. Ct. at 2051; see also Department of Transportation

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No. 23-5129 September Term, 2022

v. Association of American Railroads, 575 U.S. 43, 57 (2015) (Alito, J., concurring)

(“There is good reason to think that those who have not sworn an oath cannot exercise

significant authority of the United States.”).

To so hold could create a constitutional loophole. It would suggest that

Congress was free to fix the constitutional infirmity with the ALJs in Lucia simply by

moving them outside of the Executive Branch. But that wouldn’t cure the basic defect

motivating the Supreme Court: Only the President and properly appointed Officers of

the United States may exercise significant executive power. See Lucia, 138 S. Ct. at

2051 (citing Buckley, 424 U.S. at 126). “What cannot be done directly cannot be done

indirectly. The Constitution deals with substance, not shadows.” Students for Fair

Admissions, Inc. v. President and Fellows of Harvard College, No. 20-1199, slip op. 39

(U.S. June 29, 2023) (cleaned up).

To be sure, Congress may authorize private organizations to work with

government regulators. For example, it does not violate the Constitution to let private

entities make recommendations that the government later approves. See Sunshine

Anthracite Coal Co. v. Adkins, 310 U.S. 381, 399 (1940). But the hearing officers here

do not just make recommendations—they enforce securities laws and decide parties’

rights. And unless the losing party appeals to the SEC or the SEC steps in

unprompted, the hearing officers’ decisions are final.

***

There is a serious argument that FINRA hearing officers exercise significant

executive power. And it is undisputed that they do not act under the President. That

may be a constitutional problem. See U.S. Const. art. II, § 1, cl. 1; id. art. II, § 2, cl. 2. 

The Court is right to grant an injunction pending appeal to let Alpine litigate its

case against FINRA, without the agency first sentencing it to the corporate death

penalty.

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