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In re Eric S. Smith

The Financial Industry Regulatory Authority (FINRA) cannot legally regulate or discipline Mr. Smith or his company, Consulting Services Support Corporation (CSSC), as they have never been FINRA members. Nevertheless, FINRA launched a formal disciplinary proceeding in 2017 against Mr. Smith and a brokerage firm CSSC owned, wrongly accusing him and the firm of misconduct dating back to 2010. A FINRA-assembled panel ultimately imposed a lifetime industry ban on Mr. Smith in January 2019, ordering him and the brokerage firm to jointly pay more than $140,000 combined in restitution and costs for the proceeding. Mr. Smith appealed those illegitimate penalties to FINRA’s National Adjudicatory Council, which affirmed the panel’s decision and ordered him to pay another $1,200 in appeal costs.

Mr. Smith subsequently appealed FINRA’s decision to SEC in October 2020, later requesting an oral argument. Although the briefing was completed nearly three years ago, the appeal remains undecided to this day. SEC’s own rules required the agency to issue a ruling on Mr. Smith’s appeal more than two years ago, yet SEC has granted itself nine consecutive 90-day extensions to decide the case. Keeping him in appellate limbo egregiously violates Mr. Smith’s constitutional right to due process of law and delays his ability to seek, if necessary, review of his case on the merits in an Article III court. NCLA urges the U.S. Sixth Circuit Court of Appeals to compel SEC to set aside FINRA’s disciplinary decision, or at least require the agency to rule on his appeal within 30 days.

At least a dozen similarly situated litigants are endlessly waiting for SEC to decide their years-old pending appeals of disciplinary sanctions imposed by FINRA and other self-regulatory organizations. In each case, SEC has repeatedly extending its time to decide these appeals.

Kara Rollins
Litigation Counsel
Russ Ryan
Senior Litigation Counsel

In re Eric S. Smith

March 7, 2024 | Read More


NCLA Asks Sixth Circuit to Free FINRA Hostage from SEC’s ‘Hotel California’ Adjudication Regime

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