A broker-dealer whose owner has a history of fighting securities regulators filed a lawsuit Tuesday against the industry's primary watchdog, the Financial Industry Regulatory Authority Inc. The firm, Alpine Securities Corp., claims it was denied its due process rights when Finra recently canceled face-to-face meetings in its enforcement hearing against it.
Alpine Securities, which is owned by John Hurry and his wife Justine, is seeking to block a recent order declaring that the remainder of its current Finra disciplinary hearing be carried out via videoconferencing.
Finra sued Alpine last year, alleging that, in the face of mounting financial difficulties, Alpine implemented a series of exorbitant and arbitrary fees, according to the broker-dealer's BrokerCheck profile.
[More: Finra expels Alpine Securities]
When Finra's disciplinary hearings started in February, Finra presented six witnesses in person to Alpine's one, according to the complaint. But the process was then shut down as a result of the COVID-19 pandemic.
The hearings were eventually scheduled to move forward with in-person meetings. But Finra allegedly changed course, according to the Alpine Securities' lawsuit, and on Nov. 2 ordered that the hearings start again at the end of the month via Zoom videoconferencing.
This violates Alpine's rights to "due process" as guaranteed in the constitution, according to the complaint.
"Alpine will either have to proceed in an inadequate and unfair virtual forum with its counsel located in different states across the country, or risk the health and safety of its representatives and counsel by asking them to travel to Utah to provide representation in the same inadequate and unfair virtual forum," according to the complaint. Alpine is based in Salt Lake City.
“Alpine filed this case to try to ensure that it received a fair process that it is due in defending itself against Finra’s charges in the disciplinary action,” the firm’s lawyer, Aaron Lebenta, an attorney with Parsons Behle & Latimer, wrote in an email. “Alpine is asking the court to prevent this unequal treatment and preserve Alpine’s substantial rights to a fair trial.”
A Finra spokesperson, Michelle Ong, declined to comment. Mr. Hurry did not return a phone message to comment.
It is extremely unusual for brokerage firms to fire such legal shots at Finra. Broker-dealer executives grumble privately about Finra's reach and regulations but typically are anxious and fearful of speaking publicly and drawing any more scrutiny from Finra and its staff of more than 3,000.
That doesn't seem to be the case with Hurry. He also controls Scottsdale Capital Advisors Corp. and has a history of challenging securities regulators.
Scottsdale Capital, for example, is currently appealing to the Securities and Exchange Commission a $1.5 million Finra fine from 2018 stemming from the sale of unregistered securities, according to BrokerCheck.
A new proposal could end the ban on promoting client reviews in states like California and Connecticut, giving state-registered advisors a level playing field with their SEC-registered peers.
Morningstar research data show improved retirement trajectories for self-directors and allocators placed in managed accounts.
Some in the industry say that more UBS financial advisors this year will be heading for the exits.
The Wall Street giant has blasted data middlemen as digital freeloaders, but tech firms and consumer advocates are pushing back.
Research reveals a 4% year-on-year increase in expenses that one in five Americans, including one-quarter of Gen Xers, say they have not planned for.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
