NCLA Asks Fourth Circuit to Shutter FINRA’s Illegal ‘Private’ Enforcement Regime
Frank Harmon Black and Southeast Investments, N.C., Inc. v. Securities and Exchange Commission and Financial Industry Regulatory Authority, Inc.
Washington, D.C., July 07, 2026 (GLOBE NEWSWIRE) -- The nominally private Financial Industry Regulatory Authority (FINRA) took four years to investigate and penalize Frank Black and his North Carolina securities firm with more than $70,000 in sanctions. Mr. Black then spent four years waiting for the Securities and Exchange Commission (SEC) to decide his appeal, and two more years for FINRA to reprocess part of the case and SEC to decide his appeal again. In all, he suffered for 10 years with no court or jury involved to hear the merits of his case against how SEC and FINRA treated him, until now.
The New Civil Liberties Alliance has filed an amicus curiae brief in Black v. SEC and FINRA urging the U.S. Court of Appeals for the Fourth Circuit to correct this extra-constitutional exercise of unsupervised governmental power and inexcusable delays by canceling Mr. Black’s sanctions as law requires. The type of decade-long, brutal regulatory experience he has endured, with no adjudication from an actual judge or jury, is flagrantly illegal. And it happens all the time.
FINRA investigates, prosecutes, and punishes hundreds of securities firms and brokers every year for alleged violations of federal securities laws and rules, all without meaningful supervision by a presidentially appointed federal officer. FINRA claims it is not a “state actor”—leaving it unbound by most constitutional restraints when it investigates, prosecutes, and punishes alleged wrongdoers. But when private actors wield substantial executive power ordinarily performed by government officials, as FINRA does, Article II of the Constitution and the so-called private nondelegation doctrine demand pervasive governmental supervision and oversight.
That oversight and supervision are woefully lacking during FINRA enforcement investigations and disciplinary proceedings. SEC provides virtually no real-time supervision or direction of FINRA’s law enforcement activities. Indeed, in most cases, SEC commissioners are entirely oblivious to FINRA’s investigatory and prosecutorial activities, even as those activities routinely threaten fines and other career-altering sanctions against Americans. FINRA cannot have it both ways. It cannot evade the Constitution’s appointment, removal, due process, and jury-trial requirements by claiming to be a mere private actor, while simultaneously wielding vast, unsupervised governmental power. If FINRA insists on being treated as a purely private actor, its unsupervised investigation, prosecution, and punishment of Frank Black and his securities firm were blatantly unconstitutional.
SEC’s persistent delays also violate Americans’ rights to due process of law under the Fifth Amendment, to timely agency action under the Administrative Procedure Act (“APA”), and to their very reasonable expectation that SEC will comply with the rules it has set for itself. NCLA has fought this injustice in case after case.
NCLA released the following statements:
“FINRA is either a governmental actor or a private corporation, but it cannot claim to be both. If it is a governmental actor, it must obey the Constitution like all other governmental actors. If not, it needs to be far more closely supervised by the SEC to satisfy the requirements of the private nondelegation prohibition.”
— Russ Ryan, Senior Litigation Counsel, NCLA
“The Fourth Circuit should end FINRA's power to operate a private law enforcement regime with no real government supervision.”
— Andrew Morris, Senior Litigation Counsel, NCLA
For more information visit the amicus page here.
ABOUT NCLA
NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.
Joe Martyak New Civil Liberties Alliance 703-403-1111 joe.martyak@ncla.legal
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