Court agrees FINRA is unconstitutional but dismisses case on timing

Charlotte, North Carolina; March 25, 2026: A federal court dismissed a veteran securities broker’s constitutional challenge to FINRA yesterday — not because his arguments lacked merit, but because the court ran out of time to decide them. Frank Black, who has worked in the financial industry since 1971, has spent 14 years fighting a fine and lifetime industry ban stemming from 16 personal emails his employee’s wife accidentally sent from a work account that the company did not preserve.

“The court agreed with us on every substantive point: FINRA is unconstitutionally structured, and Frank suffered real harm,” said Adi Dynar, an attorney with Pacific Legal Foundation. “A private corporation cannot wield the government’s prosecutorial power without constitutional guardrails. Frank Black is fighting not just for himself, but for everyone FINRA has ensnared in its unconstitutional adjudication machine.”

FINRA, a private nonprofit tasked with enforcing federal securities law, hit Black and his firm with a nearly quarter-million-dollar fine and lifetime industry ban over a minor recordkeeping violation — all through its own in-house tribunal. The SEC took 11 years to reduce the penalty to $73,500 and lift the lifetime ban, acting two months after Pacific Legal Foundation filed suit.

Today, the district court acknowledged that FINRA “subverts the constitutional design” but dismissed because, by the time a judge was assigned to the case, the SEC had wrapped up its proceedings — and once the agency process ends, the right to challenge it in district court disappears. The case now heads to the Fourth Circuit, where Black will continue pressing his constitutional claims.

Pacific Legal Foundation represents Black free of charge. The case is Frank Black and Southeast Investments N.C., Inc. v. FINRA.