The Securities and Exchange Commission expressed its intent to file a friend of the court brief in the lawsuit filed by Scottsdale Capital Advisors Corporation and certain of its senior officers against the Financial Industry Regulatory Association a few weeks ago, in which Scottsdale challenged FINRA’s authority to bring a disciplinary action against the plaintiffs alleging violations grounded in the Securities Act of 1933. Plaintiffs had contended that FINRA has no authority to prosecute claims under the Securities Act because its disciplinary authority is limited to matters that might constitute violations of the Exchange Act of 1934, a provision of US law that established the SEC, authorizes national securities associations such as FINRA, and generally governs the secondary trading of securities, financial markets and their participants, including broker-dealers. The Securities Act generally addresses solely the issuance of securities, including imposing registration and disclosure requirements. Among other things, the SEC indicated it will argue that plaintiff’s federal law case is untimely and that plaintiffs must first pursue their administrative remedies before asserting any challenges in a federal court. (Click here for details regarding Scottsdale’s lawsuit in the article, “Broker-Dealer Challenges FINRA’s Authority to Enforce Original Federal Securities Law” in the March 27, 2016 edition of Bridging the Week.)