Court Opinion

ID: 4109107
Source: CourtListenerOpinion
Date Created: 2016-12-20 21:01:28.329979+00
Date Added: 2024-06-11T14:28:13.972430
License: Public Domain

PUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 16-1497

SCOTTSDALE CAPITAL ADVISORS CORPORATION;        JOHN   J.   HURRY;
TIMOTHY B. DIBLASI; DARREL MICHAEL CRUZ,

                Plaintiffs – Appellants,

           v.

FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.,

                Defendant – Appellee.

-----------------------------------

SECURITIES AND EXCHANGE COMMISSION,

                Amicus Supporting Appellee.

Appeal from the United States District Court for the District of
Maryland, at Greenbelt.    Deborah K. Chasanow, Senior District
Judge. (8:16-cv-00860-DKC)

Argued:   October 28, 2016                Decided:   December 20, 2016

Before MOTZ, KING, and DUNCAN, Circuit Judges.

Affirmed by published opinion. Judge Duncan wrote the opinion,
in which Judge Motz and Judge King joined.

ARGUED: Jonathan S. Franklin, NORTON ROSE FULBRIGHT US LLP,
Washington, D.C., for Appellants.       Timothy Wilson Mountz,
FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC., Washington, D.C.,
for Appellee.     Martin V. Totaro, SECURITIES AND EXCHANGE
COMMISSION, Washington, D.C., for Amicus Curiae.      ON BRIEF:
John W. Akin, NORTON ROSE FULBRIGHT US LLP, Washington, D.C.,
for Appellants.   Terri L. Reicher, Office of General Counsel,
FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC., Washington, D.C.,
for Appellee.     Anne K. Small, General Counsel, Sanket J.
Bulsara, Deputy General Counsel, Michael A. Conley, Solicitor,
Dominick V. Freda, Senior Litigation Counsel, Josephine T.
Morse, Office of the General Counsel, SECURITIES AND EXCHANGE
COMMISSION, Washington, D.C., for Amicus Curiae.

                               2
DUNCAN, Circuit Judge:

      Scottsdale Capital Advisors Corporation and three of its

current    and    former      officers       (collectively,          “Scottsdale”)        are

respondents      in   an     ongoing       disciplinary        proceeding     before      the

Financial      Industry       Regulatory         Authority,      Inc.      (“FINRA”)      for

allegedly      selling       unregistered          securities        in    violation       of

Section    5    of    the    Securities          Act   of    1933,    15    U.S.C.      § 77e

(“Securities Act”) and FINRA Rule 2010.                        Before FINRA completed

its   proceedings,          Scottsdale      sought      an   injunction       in   federal

district court, claiming the FINRA proceeding is unauthorized

because FINRA may only discipline members for violations of the

Securities       Exchange      Act    of    1934,      15    U.S.C.     § 78a,     et    seq.

(“Exchange     Act”).         The    district      court     dismissed      for    lack    of

subject-matter        jurisdiction         and    Scottsdale      appeals.         For    the

reasons that follow, we affirm.

                                             I.

                                             A.

      Congress, through the Exchange Act, delegated the power to

register       national         securities             associations         (“RSAs”        or

“associations”)        to     the     Securities         and     Exchange      Commission

(“SEC”).       Pursuant to this authority, the SEC registered FINRA

                                              3
as an RSA. 1   FINRA, comprised of financial brokers and dealers,

promulgates rules to enforce broker-dealer compliance with the

Exchange Act, “the rules and regulations thereunder . . . and

the rules of the association.”       15 U.S.C. § 78o-3(b)(2).

     Despite   FINRA’s   seemingly    broad   power,   Congress   mandated

that the SEC exercise close supervision over the association.

Before any FINRA rule goes into effect, the SEC must approve the

rule and specifically determine that it is consistent with the

purposes of the Exchange Act.        Id. §§ 78o-3(b)(6), 78s(b)(2)(C).

The SEC may also amend any existing rule to ensure it comports

with the purposes and requirements of the Exchange Act.                Id.

§ 78s (b)(1), (c).

                                     B.

     The Exchange Act sets out the process by which FINRA may

initiate disciplinary proceedings, which is codified in FINRA’s

Code of Procedure.       15 U.S.C. § 78o-3(h); FINRA Rule 9000, et

     1  FINRA, a private not-for-profit corporation, is the
successor organization to the National Association of Securities
Dealers, Inc. (“NASD”). In 2007, NASD merged with the New York
Stock Exchange’s regulation committee to form FINRA.          See
Notice, 72 Fed. Reg. 42169, 42170 (Aug. 1, 2007). FINRA is the
only RSA. FINRA is also a self-regulatory organization (“SRO”)
by virtue of the fact that is an RSA. 15 U.S.C. § 78c(a)(26).

                                     4
seq. 2       When FINRA believes a member has violated “any rule,

regulation,          or    statutory            provision,      including          the    federal

securities          laws        and       the     regulations        thereunder,”           FINRA

Rule 9211,         it     begins      a    disciplinary        proceeding       by       filing   a

complaint against the member.                          Id. 9212.         If the respondent

requests, FINRA will hold a hearing, after which a Hearing Panel

will issue a written decision.                         Id. 9221, 9268.        The respondent

or FINRA may appeal the Hearing Panel’s decision to the National

Adjudicatory Council (“NAC”), a FINRA committee.                               Id. 9311.          An

appeal       to    the    NAC    acts       as    a     stay   of   the      Hearing      Panel’s

decision.          Id. 9311(b).            The NAC may affirm, modify, reverse,

dismiss, or remand the Hearing Panel’s decision.                                   Id. 9349(a).

The NAC’s decision (or the Hearing Panel’s decision if there was

no   appeal)        is    FINRA’s         final   action       unless     FINRA’s        Board    of

Governors calls for review.                     Id. 9351.

         Review of final FINRA action invokes the SEC’s role under

the Exchange Act in overseeing FINRA’s authority to discipline

members.          FINRA must “promptly file notice” with the SEC when it

“imposes      any       final    disciplinary           sanction”       on   any    member       and

FINRA members may appeal adverse final FINRA actions to the SEC

for review.          15 U.S.C. § 78s(d)(1), (2).                    An appeal to the SEC

         2
       FINRA Rules are not published in the Code of Federal
Regulations        but        can       be        found        at
http://finra.complinet.com/en/display/display.html?rbid=2403&ele
ment_id=607.

                                                   5
“shall stay the effectiveness of any sanction, other than a bar

or an expulsion.”            FINRA Rule 9370(a).           The SEC, upon its own

motion or by appeal from the member, “shall” then review FINRA’s

decision to ensure any rule allegedly violated was “applied in a

manner[]      consistent      with   the    purposes”      of     the   Exchange         Act.

15 U.S.C. § 78s(e)(1)(A).              The SEC can affirm, modify, or set

aside FINRA’s decision or remand for further proceedings.                                  Id.

§ 78s(e)(1).      If, after SEC review, a party remains “aggrieved,”

it     “may   obtain    review”      of    the     SEC’s       final    order       in    the

appropriate court of appeals.              Id. § 78y(a)(1); see also Bennett

v. SEC, No. 15-2584, slip op. at 3 (argued Oct. 28, 2016).                                With

this    judicial-review        scheme      in    mind,    we     turn   to     the       FINRA

proceeding at issue here.

                                           C.

       On May 15, 2015, FINRA initiated a disciplinary proceeding

against Scottsdale, alleging it had liquidated over 74 million

shares of unregistered stocks in violation of Section 5 of the

Securities      Act,    15    U.S.C.      § 77e(a).            According      to    FINRA’s

complaint,     Scottsdale’s       violation        of    the    Securities         Act    also

violated FINRA Rule 2010, which requires members to “observe

high    standards      of    commercial         honor    and    just    and     equitable

principles of trade.”             FINRA Rule 2010.               Scottsdale filed a

motion for summary disposition with the FINRA Hearing Panel,

alleging, inter alia, that FINRA did not have jurisdiction to

                                            6
bring the proceeding because it can only charge violations of

the Exchange Act, not the Securities Act.                        The Hearing Panel

denied the motion and scheduled a hearing for June 13–24, 2016.

     Scottsdale then filed for declaratory and injunctive relief

in   the    United       States     District       Court   for    the     District   of

Maryland,     alleging,        as     it     had     before      FINRA,     that     the

disciplinary proceeding was ultra vires.                     FINRA filed a motion

to dismiss for lack of subject-matter jurisdiction and failure

to state a claim.

     On April 26, 2016, the district court held a hearing on the

motion to dismiss.           Assuming without deciding that Scottsdale

had a cause of action under the Exchange Act, the district court

nonetheless found it “clear” that “Congress intended to channel

judicial    review       through    th[e]    comprehensive       scheme”     found    in

15 U.S.C. §§ 78s and 78y.             J.A. 176.        “The question of whether

the . . . FINRA rules that are involved here are within their

authority    and     appropriate,”         the    district    court     reasoned,     is

“clearly within” the review scheme outlined in the Exchange Act.

J.A. 176–77.        The district court relied on Thunder Basin Coal

Company v. Reich, 510 U.S. 200 (1994), to dismiss the complaint,

finding it “beyond the subject matter jurisdiction” of the court

to   consider        a     challenge        “to     the    ongoing        disciplinary

proceeding.”       J.A. 178.       Scottsdale appeals.

                                            7
                                           II.

                                           A.

       Scottsdale argues FINRA exceeded its authority by charging

it with violations of the Securities Act and, therefore, the

proceeding is ultra vires.             FINRA counters that, as a threshold

matter,      Scottsdale     must    first       press   its    claim     through     the

administrative process and then seek review in the appropriate

court of appeals.           We review a district court’s dismissal of a

complaint     for    lack    of    subject-matter        jurisdiction        de     novo.

Nat’l Taxpayers Union v. U.S. Soc. Sec. Admin., 376 F.3d 239,

241 (4th Cir. 2004).

                                           B.

       Article III courts are “courts of limited jurisdiction,”

possessing      “only     that     power    authorized        by    Constitution     and

statute.”      Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.

375,   377    (1994).       “Congress      may,    in   its        discretion,     grant,

withhold,     or    otherwise      limit    the    jurisdiction         of   the   lower

federal courts.”          Wade v. Blue, 369 F.3d 407, 410 (4th Cir.

2004).    We are bound by those limitations unless they offend the

Constitution.       See Bowles v. Russell, 551 U.S. 205, 212 (2007).

       Notwithstanding the exclusive grant of jurisdiction to the

courts of appeals in the Exchange Act, Scottsdale argues the

district court had jurisdiction to consider its claim because

FINRA lacked authority to initiate the disciplinary proceeding.

                                            8
Scottsdale believes it need not, as it describes it, exhaust

administrative remedies before seeking review in this court for

two reasons. 3      First, Scottsdale claims the limited exception to

jurisdiction-stripping recognized in Leedom v. Kyne, 358 U.S.

184 (1958), applies because FINRA is allegedly acting outside of

its statutory authority.          Alternatively, Scottsdale asserts its

claim    is   not   of   the   type   Congress   intended   to   remove   from

district court jurisdiction under the framework articulated in

Thunder Basin.        We discuss each claim in turn.

                                       C.

                                       1.

     Scottsdale first argues the district court had jurisdiction

under Leedom.       Leedom involved a challenge to the National Labor

Relations Board’s (“NLRB”) decision--in direct violation of the

National      Labor      Relations    Act   (“NLRA”)--to     include      both

     3  Scottsdale incorrectly frames the issue as one of
exhaustion.    We agree with the district court and the SEC as
amicus that the district court is not the proper forum for
Scottsdale’s claim.       Exhaustion is a temporal concern--the
inquiry is when, not whether, a plaintiff may bring a claim.
Requiring a plaintiff to first exhaust administrative remedies
avoids   the   “premature   interruption  of   the  administrative
process.”    McKart v. United States, 395 U.S. 185, 193 (1969).
However,   when   Congress    creates  a  statutory  scheme   that
unambiguously vests judicial review of agency action in the
courts of appeals, “those procedures ‘are to be exclusive’”
unless a plaintiff can show its claims are not of the type
Congress intended to limit.        Free Enter. Fund v. Pub. Co.
Accounting Oversight Bd., 561 U.S. 477, 489 (2010) (quoting
Whitney Nat. Bank in Jefferson Parish v. Bank of New Orleans &
Trust Co., 379 U.S. 411, 420 (1965)).

                                        9
professional   and       nonprofessional          employees   in    a     collective

bargaining unit.         358 U.S. at 184–86.            Before the Court, the

NLRB conceded that it “had acted in excess of its powers and had

thereby   worked     injury         to    the     statutory   rights”       of    the

petitioners.       Id.    at    187.      Even     though   the    NLRA    precluded

district court jurisdiction of such an action, the Supreme Court

held that the district court had jurisdiction because the NLRB

had acted “in excess of its delegated powers and contrary to a

specific prohibition in the Act.” 4               Id. at 188 (emphasis added).

In such a case, the Court reasoned, the suit is not to “review”

as the term is used in the governing statute because the agency

has acted without authority.             Id.

     Scottsdale contends that, similar to the action in Leedom,

FINRA has exceeded its delegated authority, thereby removing the

statutory bar to jurisdiction.                 However, such a reading extends

Leedom    beyond     its        “painstakingly         delineated         procedural

boundaries.”       Boire       v.   Greyhound      Corp.,   376    U.S.    473,   481

(1964).   Leedom relied on the presumption that when “Congress

     4 The NLRA provision at issue stated “the Board shall not
(1) decide that any unit is appropriate for such purposes if
such unit includes both professional employees and employees who
are not professional employees unless a majority of such
professional employees vote for inclusion in such unit.”
Leedom, 358 U.S. at 185.     The NLRB included professional and
nonprofessional employees in the unit and refused to hold a vote
to allow professional employees to agree to inclusion.       Id.
at 186.

                                          10
has given a ‘right’ . . . it must be held that it intended that

right         to        be     enforced”         and      that      intention       supersedes

congressional                jurisdiction-stripping           provisions.               358     U.S.

at 191.            If    the    district     court       in   Leedom       did    not    exercise

jurisdiction,            petitioners       would       have   “no    other       means,       within

their control, . . . to protect and enforce” a congressionally

given right.                 Id. at 190.         By contrast, Scottsdale does not

identify a congressionally authorized right of action. 5

         Leedom is also factually distinguishable in that FINRA does

not concede that it acted in excess of its statutory authority.

Before the district court and on appeal, FINRA maintains it has

authority          to    sanction     members       for    violations        of    all    federal

securities laws, including the Securities Act.                                    Finally, and

crucial        to       the    decision    in     Leedom,        Scottsdale       has    ultimate

recourse to the federal courts through 15 U.S.C. § 78y.                                       Leedom

is   a       narrow      exception,       used    only     when     “but    for    the    general

jurisdiction of the federal courts there would be no remedy” for

a congressionally authorized private right of action.                               Id. 6

         5
       We share the district court’s doubt that Scottsdale has
identified a private right of action to bring this claim.  See
Alexander v. Sandoval, 532 U.S. 275, 293 (2001).

         6
        Further, the Supreme Court foreclosed Scottsdale’s
expansive interpretation of Leedom in Board of Governors of the
Federal Reserve System v. MCorp Financial, Inc., 502 U.S. 32
(1991). In MCorp, the Fifth Circuit exercised jurisdiction over
a claim despite a jurisdiction-stripping provision because it
(Continued)
                                                  11
                                        2.

     In addition to being procedurally and factually dissimilar

to Leedom, Scottsdale cannot satisfy this court’s two-pronged

test to invoke the Leedom exception.                 To do so, a petitioner

must make (1) a “strong and clear demonstration that a clear,

specific and mandatory [statutory provision] has been violated,”

Long Term Care Partners, LLC v. United States, 516 F.3d 225, 234

(4th Cir. 2008) (quoting Newport News Shipbuilding & Dry Dock

Co. v. NLRB, 633 F.2d 1079, 1081 (4th Cir. 1980)), and (2) “the

absence    of   federal   court   jurisdiction        over     an    agency     action

‘would wholly deprive’ the aggrieved party ‘of a meaningful and

adequate    means   of    vindicating    its       statutory    rights.’”          Id.

at 233 (quoting Bd. of Governors of Fed. Reserve Sys. v. MCorp

Fin., Inc., 502 U.S. 32, 43 (1991)).                 After considering these

criteria, we conclude that the Leedom exception does not apply.

     First,      FINRA     has    not    violated       a      clear         statutory

prohibition.     “When a party invokes Leedom as the basis for this

court’s    jurisdiction,     we   conduct      a    ‘cursory        review    of   the

read Leedom to “authoriz[e] judicial review of any agency action
that is alleged to have exceeded the agency’s statutory
authority.”   Id. at 43. The Supreme Court reversed, rejecting
such a broad reading of Leedom because the statute at issue in
MCorp--like the Exchange Act--provided “meaningful and adequate
opportunity for judicial review.”      Id.    The Court further
clarified that the lack of judicial review--and not the agency’s
alleged actions--was the “central” factor in Leedom. Id.

                                        12
merits’ to determine if the agency acted ‘clearly beyond the

boundaries of its authority.’”          Id. at 234 (quoting Champion

Int’l Corp. v. EPA, 850 F.2d 182, 186 (4th Cir. 1988)).           So long

as the agency’s interpretation of the statute is “‘plausible’

. . .    we will find that it did not ‘violate a clear statutory

mandate.’”    Id. (quoting Hanauer v. Reich, 82 F.3d 1304, 1311

(4th Cir. 1996)). 7

     Scottsdale points to numerous references in the Exchange

Act that limit the authority of FINRA to discipline members for

violations of “this chapter,” that is, the Exchange Act.             See,

e.g.,    15   U.S.C.   § 78o-3(b)(2).       Scottsdale   argues     these

provisions delimit FINRA’s authority to charge only violations

of the Exchange Act.     FINRA counters that the Exchange Act also

authorizes it to enact its own rules and enforce compliance.

See id. (“Such association is so organized . . . to enforce

compliance . . . with the provisions of this chapter . . . and

     7 Although we style our application of Leedom in terms of
agency interpretation, FINRA is not an agency.          The SEC
participated in this litigation as amicus but declined to take a
position on the merits since Scottsdale raises the same claim in
the ongoing FINRA proceedings, which the SEC will likely review.
Amicus Br. at 4.      However, the SEC has implicitly adopted
FINRA’s interpretation of its authority to sanction members for
violations of the Securities Act.   See, e.g., In re ACAP Fin.,
Inc., Exchange Act Release No. 70046, 2013 WL 3864512, at *7
(July 26, 2013) (affirming FINRA’s decision to charge a member
who sold unregistered securities in violation of the Securities
Act with violating NASD Rule 2110, the predecessor rule to FINRA
Rule 2010).

                                  13
the    rules     of     the    association.”).              According      to   FINRA,    if

Congress did not intend for it to have authority to enact rules

for securities violations beyond the Exchange Act, it would be

unnecessary for the statute to also mention both the rules of

the statute and the association (i.e., FINRA).                             FINRA further

asserts that grounding violations of the Securities Act in its

Rule 2010 is an exercise of its statutory authority to “promote

just and equitable principles of trade [and] foster cooperation

and coordination with persons engaged in regulating, clearing,

settling       . . . and       facilitating        transactions       in    securities.”

Id. § 78o-3(b)(6).            We find this interpretation plausible.                     Long

Term    Care,     516     F.3d    at    235.         Moreover,     the     Exchange      Act

provisions       that     Scottsdale         cites     do    not   clearly       proscribe

FINRA’s actions in the same way that the NLRB acted contrary to

a    direct    prohibition       of    the    NLRA    in    Leedom.        Therefore,     we

conclude FINRA has not violated a clear statutory mandate.

       Scottsdale also cannot satisfy the second criterion because

the Exchange Act provides Scottsdale a “meaningful and adequate

opportunity for judicial review” of its claims.                         MCorp, 502 U.S.

at    43.      Congress       established      a     comprehensive       system   whereby

Scottsdale can appeal an adverse FINRA decision to the SEC and a

final adverse SEC decision in the appropriate court of appeals.

15 U.S.C. §§ 78s, 78y; see also Bennett, No. 15-2584, slip op.

at 20–26.

                                              14
      Because FINRA’s interpretation of its authority to charge

its members with violations of the Securities Act is plausible

and the Exchange Act provides for meaningful judicial review,

the Leedom exception does not apply.         In so holding, we have not

decided the “ultimate merits,” Long Term Care, 516 F.3d at 234–

35, of FINRA’s position, but simply conclude that Scottsdale’s

claim   does   not   fall   within   the   “narrow   limits”   of   Leedom.

Boire, 376 U.S. at 481.

                                     D.

      Scottsdale next argues that, even if Leedom does not apply,

and     notwithstanding       the     comprehensive      judicial-review

provisions, Congress did not intend to strip district courts of

jurisdiction over this particular type of claim.           When deciding

whether a particular claim falls outside of the congressionally

enacted review scheme, we employ the two-step analysis outlined

in Thunder Basin.      First, we ask whether Congress’s intent to

divest district courts of jurisdiction is “fairly discernible”

from the statute’s text, structure, and purpose.          Thunder Basin,

510 U.S. at 207 (quoting Block v. Cmty. Nutrition Inst., 467

U.S. 340, 351 (1984); see also Bennett, No. 15-2584, slip op.

at 19).   Neither party disputes that it is “fairly discernible”

that Congress intended to preclude district court jurisdiction.

See Appellant’s Br. at 27.

                                     15
       We therefore turn to step two of Thunder Basin and ask

whether Scottsdale’s “claims are of the type Congress intended

to    be   reviewed   within      this      statutory      structure.”        510    U.S.

at 212.      This claim-specific analysis considers three factors:

(1)   whether   “adjudication          of   petitioner’s       claims     through     the

statutory-review           provisions       will     violate       due    process     by

depriving petitioner of meaningful judicial review”; (2) whether

the    claims   are    “wholly     collateral”        to    the    statute’s    review

provisions;     and   (3)     whether       the    claims    are   “outside     of    the

agency’s expertise.”             Id. at 212–14.            Applying each of these

factors to Scottsdale’s claim, we agree with the district court

that the Exchange Act’s “administrative structure was intended

to preclude district court jurisdiction over petitioner’s claims

and that those claims can be meaningfully reviewed through that

structure consistent with due process.”                   Id. at 218.

       First,   Scottsdale       can    obtain     meaningful      judicial    review.

The Exchange Act sets out a comprehensive review scheme through

which Scottsdale could have ultimate judicial review in this

court.      15 U.S.C. § 78y.            Scottsdale contends post-proceeding

judicial review is inadequate for two reasons: (1) forcing it to

submit to an allegedly unauthorized proceeding before seeking

Article III judicial review will cause irreparable harm; and

(2) there     will    be    no   appeal      to    this    court   if    it   prevails.

Neither contention has merit.

                                            16
      Scottsdale’s desire to “prevent the per se irreparable harm

of   being    forced    to    submit        to    the    orders       of    an    organization

acting       beyond     the        limits        of     its     statutory           authority,”

Appellant’s      Br.    at     28–29,       conflicts          with     the      long-standing

principle that “the expense and annoyance of litigation is ‘part

of the social burden of living under government.’”                                    Bennett,

slip op. at 22 (quoting FTC v. Standard Oil of Cal., 449 U.S.

232, 244 (1980)).         The same is true of Scottsdale’s allegations

of potential reputational harm.                   See Sampson v. Murray, 415 U.S.

61, 89 (1974).

      Scottsdale’s concern that it will be unable to press its

claims if it prevails before FINRA also lacks merit.                                      Federal

regulations       “specifically             provide[]”          mechanisms           by        which

Scottsdale      could    challenge          FINRA       Rule     2010       outside       of    the

disciplinary      proceeding.               Standard      Oil,        449     U.S.    at       245.

Scottsdale could petition the SEC--apart from any disciplinary

action--to      amend   or     repeal       FINRA       Rule    2010.         See    17    C.F.R.

§ 201.192.       The SEC’s decision on FINRA’s rule would be final

agency action of which Scottsdale could then seek review in the

appropriate      court        of     appeals.            15     U.S.C.        § 78y.             And

Scottsdale’s position is wholly unlike that of the petitioners

in Free Enterprise: Scottsdale is not required to “‘challenge a

Board rule at random’ or ‘bet the farm’ by voluntarily incurring

a    sanction     in     order        to     trigger           § 78y’s        mechanism         for

                                                 17
administrative and judicial review.”                              Bennett, No. 15-2584, slip

op.    at    10    (quoting          Free    Enter.         Fund     v.    Pub.       Co.    Accounting

Oversight Bd., 561 U.S. 477, 490 (2010)).

       Turning to the second Thunder Basin factor, Scottsdale’s

claims      are     not       wholly       collateral          to   the    Exchange              Act.     In

Bennett, we explained that a claim is not wholly collateral when

it    is    “‘the      vehicle       by     which      [petitioners]            seek        to    reverse’

agency action.”               Bennett, No. 15-2584, slip op. at 26 (quoting

Elgin      v.   Dep’t        of     Treasury,       132      S.     Ct.    2126,       2139       (2012)).

Scottsdale challenges “FINRA’s statutory authority to prosecute

disciplinary           actions        premised         on      alleged         violations          of    the

Securities Act.”               Appellant’s Br. at 30.                     As Scottsdale’s claim

arises      out        of     the    proceeding           against         it    and     provides           an

affirmative defense, it is not wholly collateral to the statute.

       Finally,             Congress       has    expressly           determined             the        SEC’s

expertise is relevant to the claim at issue here.                                            Scottsdale

argues       its       claim,        like        the      petitioners’               claim        in     Free

Enterprise, is outside of the SEC’s “competence and expertise.”

561    U.S.       at    491.          In    Free       Enterprise,             the    Supreme           Court

permitted a petitioner to bring a pre-enforcement constitutional

challenge         to    the       existence       of     the      Public       Company       Accounting

Oversight         Board       despite       Congress’s            intent       to     channel          claims

through the statutory scheme laid out in § 78y.                                          Id. at 490.

The Free Enterprise Court held that agency expertise was not

                                                    18
required       because      the     claims           did     “not        require          ‘technical

considerations of [agency] policy,’” id. at 491 (quoting Johnson

v.    Robinson,      415    U.S.    361,    373           (1974)),       but       were    “standard

questions      of    administrative         law,          which    the     courts         are   at   no

disadvantage in answering.”             Id.

       Scottsdale’s argument that this claim lies outside of the

agency’s expertise is belied by the text of the Exchange Act.

Section      19     of    the    Exchange           Act     lays     out       a    comprehensive

oversight scheme whereby Congress gives the SEC the authority to

supervise FINRA’s rules, including approving or modifying FINRA

rules   in     any   way    the    agency       deems        appropriate            or    necessary.

15 U.S.C. § 78s.                As part of the SEC’s oversight of FINRA,

Congress       vested      authority       in       the     SEC      to    review          “a   final

disciplinary sanction imposed by” FINRA and determine whether

its    rules      “were    applied     in       a    manner[]        consistent            with      the

purposes” of the Exchange Act.                       15 U.S.C. § 78s(e)(1).                     Thus,

Congress       unambiguously        channeled              Scottsdale’s            claim--whether

FINRA has exceeded its authority in charging Scottsdale--to the

SEC for determination in the first instance.                                   Considering all

three Thunder Basin factors, we conclude that the district court

lacked jurisdiction over Scottsdale’s claim.

                                                19
                                         III.

     When Congress provides a comprehensive review scheme our

judicial   review       must   comport    with       those   statutory    provisions

unless    doing    so    would   violate       the    Constitution.        Congress,

through    the    Exchange     Act,   intended        to   channel   objections    to

FINRA’s authority through the agency and the courts of appeals.

In so doing, it is clear Congress sought to preclude federal

district-court      jurisdiction.          Because         Scottsdale    can   obtain

meaningful judicial review of its claim in this court following

the appeal process outlined in the Exchange Act, we hold its

challenge to FINRA’s authority is the type of claim Congress

intended     to     be     reviewed       within       the     statutory       scheme.

Accordingly, the district court properly dismissed for lack of

subject-matter jurisdiction.             For these reasons, the judgment of

the district court is

                                                                           AFFIRMED.

                                          20