#2 Pencil Fight

MMTLP #FAFO #Veteran #Relentless Great article that is circulating on LinkedIn and X. Federal courts are beginning to scrutinize FINRA’s unchecked authority and the Kelly v. FINRA case in Nevada sits squarely at the center of that shift. Last week, two federal courts rejected long‑standing assumptions that FINRA and the SEC can force enforcement targets through a decade‑long administrative gauntlet before any constitutional challenge can reach an Article III court. In Black v. SEC and Smith v. SEC, the courts openly questioned whether FINRA can impose punitive sanctions without a jury trial and without Article III oversight. Both decisions stopped short of binding precedent only because FINRA escaped on procedural technicalities. That context matters for MMTLP and for the Kelly case. FINRA recently filed supplemental authority pointing to district court dismissals in Spears, Pease, Willcot, and Rolo. But those cases all share the same flaw: they assumed FINRA’s conduct was “regulatory” without ever examining whether the specific acts at issue were actually delegated under the Exchange Act. Kelly’s filings highlight what no court has yet addressed: • FINRA unilaterally altered issuer‑submitted corporate action data • FINRA converted a temporary halt into a permanent market deletion • FINRA acted without any SEC order, rulemaking, or statutory delegation • FINRA’s actions occurred outside the scope of Rule 6440 and Section 12(k) • And under Ninth Circuit law (Sparta Surgical), immunity attaches only when an SRO acts within authority actually delegated by Congress or the SEC That threshold question — was FINRA authorized to do what it did? — has never been answered in any MMTLP case. Even FINRA’s own filings inadvertently reinforce the point. In its objection, FINRA argues there are “no exceptions” to immunity so long as it acts pursuant to the Exchange Act which is precisely the issue Kelly raises. Whether FINRA acted “pursuant to” the Exchange Act is the entire dispute. Meanwhile, the Supreme Court’s unanimous Galette decision (March 2026) underscored a simple principle: separately incorporated entities cannot selectively invoke governmental immunity while avoiding governmental accountability. FINRA, a private Delaware corporation, cannot claim constitutional independence in one breath and absolute immunity in the next. The bottom line: The constitutional cracks appearing in FINRA’s enforcement structure, from Jarkesy to Black to Smith; are now intersecting with the unresolved statutory question at the heart of MMTLP. The Kelly case is the first to squarely present that issue under controlling Ninth Circuit law. The judiciary is finally signaling that FINRA’s authority is not limitless. And for the first time, the question of whether FINRA exceeded its statutory mandate in MMTLP is positioned for real judicial review. linkedin.com/pulse/finras-c…

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