from the United States District Court for the Middle District
of Florida D.C. Docket No. 8:15-cv-02920-JSM-EAJ
TJOFLAT and ROSENBAUM, Circuit Judges, and REEVES, [*] District Judge.
us is the District Court's dismissal of Antony
Turbeville's complaint against the Financial Industry
Regulatory Authority ("FINRA") and its denial of
Turbeville's motion to remand the case to Florida state
court. We affirm both.
Securities Exchange Act of 1934 ("Exchange Act")
provides that persons who wish to use any instrumentality of
interstate commerce to transact in securities must join an
association of brokers and dealers registered as a national
securities association. 15 U.S.C. § 78o(a)(1),
(b)(1). In turn, the Exchange Act requires
registered national securities associations to establish
membership and conduct rules "designed to prevent
fraudulent and manipulative acts and practices, to promote
just and equitable principles of trade, . . . to remove
impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general, to
protect investors and the public interest . . . ."
Id. § 78o-3(b)(6).
member brokers or dealers violate the rules of a national
securities association or any provision of the Exchange Act,
the association can-indeed, must-levy sanctions that carry
the force of federal law. Id. § 78o-3(b)(7)
(requiring national securities associations to
"appropriately discipline" members for violating
"the rules of the association" or "any
provision of" the Exchange Act "by expulsion,
suspension, limitation of activities, functions, and
operations, fine, censure, being suspended or barred from
being associated with a member, or any other fitting
sanction"). In this way, the Exchange Act vests
registered national securities associations with a prominent
role in the administration and enforcement of federal
securities law. Fittingly, the Exchange Act refers to these
associations as "self-regulatory organizations"
("SROs"). Id. § 78s. Before taking
effect, all rules proposed by national securities
associations must be reviewed by the Securities and Exchange
Commission ("SEC") to ensure they are
"consistent with the requirements of" the Exchange
Act and may be approved by the SEC only after public notice
and comment. Id. § 78s(b)(1).
a private, non-profit Delaware corporation, is one of those
national securities associations and a registered
FINRA oversees and regulates securities firms who join its
membership, individuals who work for those firms, and
individuals associated with those firms. Securities brokers
who wish to join a FINRA-affiliated firm must pass
FINRA-administered examinations and comport their
professional conduct with the rules, regulations, and
standards FINRA promulgates. When its member brokers or
associated persons violate FINRA's rules, FINRA
disciplines them pursuant to the Exchange Act's
disciplinary process is governed by the FINRA Code of
Procedure, a series of internal rules that set forth the
disciplinary procedures that apply-and the due-process
protections afforded-to members charged with breaking the
rules. In satisfaction of the Exchange Act's requirement,
the SEC approved the FINRA Code of Procedure. Fiero v.
Fin. Indus. Regulatory Auth., Inc., 660 F.3d 569, 571-72
(2d Cir. 2011).
FINRA Code of Procedure sets forth a multi-layered hearing
and appeals process that governs disciplinary actions against
FINRA-affiliated brokers and dealers. Once FINRA formally charges
a broker with a violation by filing a complaint, a FINRA
hearing panel conducts a full hearing to determine whether
the individual violated FINRA regulations, and, if so,
imposes sanctions. See FINRA Rule 9200 (setting
forth FINRA's disciplinary procedures). The individual
may then appeal the hearing panel's finding and
punishment to FINRA's appeals board, the National
Adjudicatory Council ("NAC"). FINRA Rule 9311(a).
After that, a broker may, as of right, seek de novo
review of the NAC's decisions in the SEC. 15 U.S.C.
§ 78s(d)(2). Finally, the broker may appeal the
SEC's decision to a federal court of appeals-again, as of
right. Id. § 78y(a)(1).
to formally charging a broker with a violation and
instituting formal disciplinary proceedings, FINRA retains
discretion to issue to the broker a "Wells notice,
" a communication informing the individual that FINRA
believes it has grounds to institute a disciplinary action
and inviting him to respond and try to convince FINRA not to
institute formal proceedings. See FINRA Rule
8210(a)(1); FINRA Regulatory Notice 09-17 at 3 (Mar. 2009).
These notices become a part of the public record: FINRA's
SEC-approved rules require it to disclose communications like
Wells notices in response to public inquiries about
FINRA-affiliated brokers or firms. See FINRA Rule
8312(a), (b)(2)(A) (requiring FINRA, "[i]n response to a
written inquiry, electronic inquiry, or telephonic inquiry
via a toll-free telephone listing, " to release
"information regarding a current or former FINRA member,
" including Wells notices, which are required by the
"U5" and "U6" forms listed in the Rule).
Those rules are designed to satisfy the Exchange Act's
requirement that SROs "establish and maintain a . . .
readily accessible electronic or other process, to receive
and promptly respond to inquiries regarding . . .
registration information on its members and their associated
persons." 15 U.S.C. § 78o-3(i)(1). FINRA makes
these disclosures through its "BrokerCheck"
program, an online database that contains a report on each
currently and formerly registered broker. BrokerCheck reports
are available to the public.
rules set forth an administrative-review proceeding through
which a broker may "dispute the accuracy of"
information disclosed in his BrokerCheck report by filing
written notice stating the grounds for his dispute and
submitting supporting documentation "identifying the
alleged inaccurate factual information and explaining the
reason that such information is allegedly inaccurate."
See FINRA Rule 8312(e)(1)(B). Once the broker has
done so and if FINRA determines that the "dispute of
factual information is eligible for investigation, "
FINRA will "add a general notation to the eligible
party's BrokerCheck report stating that the eligible
party has disputed certain information included in the
report." Id. § (e)(2)(B). Once it
completes its investigation, FINRA will then issue a written
finding setting forth its determination as to the accuracy of
the information contested, and it will update the
broker's BrokerCheck report accordingly. Id.
§ (e)(3)(A)-(B). Unlike the hearing panel determination
in the formal disciplinary process, this initial finding is
the end of the road: "A determination by FINRA,
including a determination to leave unchanged or to modify or
delete disputed information, is not subject to appeal."
Id. § (e)(3)(C).
2009, FINRA filed a complaint against Antony Turbeville, a
registered representative of a FINRA-affiliated broker firm.
The complaint alleged that, among other things, Turbeville
committed securities fraud by recommending certain types of
collaterized mortgage obligations to elderly buyers who
lacked the sophistication and risk tolerance necessary to
make them suitable purchasers. A FINRA hearing panel found
that Turbeville's conduct violated FINRA's rules,
barred him from associating with any FINRA-affiliated firm,
and assessed restitution and adjudication costs against him.
Turbeville appealed the hearing panel's decision to the
NAC, which affirmed. Turbeville then appealed to the SEC.
Before the SEC reviewed his case, Turbeville withdrew his
appeal, thereby letting the hearing panel's findings and
Turbeville's appeal to the NAC was still pending, FINRA
learned that Turbeville filed a defamation suit in Florida
state court against the elderly investors who testified
against him in the course of the FINRA hearing panel's
proceedings.Upon learning of this suit, FINRA
investigated Turbeville again-this time, to determine whether
he violated FINRA rules by filing a retaliatory action
against his former customers in an attempt to influence
ongoing FINRA disciplinary proceedings. FINRA's
investigators determined that they had cause ...