As the summer comes to a close, we have pulled together a roundup of the most significant FINRA developments from recent months. From the Supreme Court’s cert denial in Alpine Securities to stepped-up AML enforcement, new crypto education initiatives and the first reforms under FINRA Forward, this issue of Bracewell’s FINRA Facts and Trends highlights the regulatory shifts and enforcement trends most likely to affect member firms heading into the fall.
Supreme Court Denies Review in Alpine Securities
The US Supreme Court has declined to review Alpine Securities Corp. v. FINRA, denying certiorari on June 2, 2025. This outcome leaves in place a key decision from the US Court of Appeals for the District of Columbia Circuit limiting FINRA’s authority under its current expedited expulsion process.
As we have reported previously, the Alpine case had the potential to significantly curtail FINRA’s enforcement powers, and had been described by FINRA in court filings as an “existential threat” to FINRA and its regulatory framework.
FINRA had accused Alpine, a broker-dealer, of misappropriating over $54.5 million from customers through inappropriate fees and misuse of funds. It sought to expel Alpine in an expedited enforcement proceeding. Alpine responded by challenging FINRA’s structure, arguing that it violated constitutional constraints including the private nondelegation doctrine and the Appointments Clause.
In issuing an emergency injunction against FINRA’s expulsion proceedings back in July 2023, the DC Circuit had indicated an openness to constitutional challenges, likening the case to the issue addressed by the US Supreme Court in Lucia v. SEC. In Lucia, the Supreme Court held that Administrative Law Judges (ALJs) within the SEC were “Officers of the United States,” who must therefore be appointed in accordance with the Appointments Clause of the Constitution. In its emergency injunction ruling, the DC Circuit had written that FINRA’s hearing officers “are near carbon copies of those ALJs.”
More recently, in its merits ruling issued in November 2024, the DC Circuit held that FINRA could not unilaterally expel a member firm without giving the SEC a chance to review the merits of the decision before the expulsion becomes effective. The DC Circuit declined, however, to rule conclusively on the constitutional challenges to FINRA’s authority.
What the Cert Denial Means for FINRA
With the Supreme Court’s refusal to hear the case, the DC Circuit’s ruling stands: FINRA’s expedited expulsions must wait for SEC review (or for the review period to lapse) before taking effect. Enforcement proceedings otherwise may continue.
FINRA has expressed that it was “pleased” by the Supreme Court’s decision—and not surprisingly, as the “existential threat” to FINRA’s powers appears to have evaporated, at least for now.
What Happens Now
- FINRA is already proposing rule changes to formalize the requirement of SEC review for expulsions, membership cancellations and denials of continued membership by disqualified firms before they take effect.
- Firms facing potential expulsion or similar sanctions should assess how these developments may affect their timelines, due process rights and exposure.
- The constitutional challenges remain unresolved and may be raised again in future cases — especially if different circuit courts reach varying conclusions.
FINRA Cracks Down: New Pressure on AML Compliance Across the Industry
FINRA appears to be ratcheting up its scrutiny of anti-money laundering (AML) practices, particularly how broker-dealers vet clients, detect risk, and respond to warning signs.
A recent Wall Street Journal report revealed that FINRA has been conducting a wide-ranging investigations into one large national firm’s AML risk-assessment mechanisms, including its vetting of both domestic and international customers, the accuracy of its risk-scoring tools and its internal reporting structures. The reported probe spans from October 2021 through September 2024 across the firm’s wealth management, trading units, and affiliated platforms. In the course of this probe, FINRA reportedly has demanded extensive documentation — organizational charts, risk models and data on how politically exposed persons (PEPs) are handled.
FINRA’s apparently broad AML probe of a major financial firm comes amid other recent examples of FINRA enforcement actions against financial institutions for AML violations, including the following:
- Robinhood settlement: Robinhood Financial and Robinhood Securities were fined $26 million and ordered to pay $3.75 million in restitution to customers. The settlement related to Robinhood’s alleged failures to implement effective AML programs, gaps in customer identification protocols (thousands of accounts were opened without proper verification), failure to detect or report suspicious trading or money movement (including account takeovers by hackers), and misleading or incomplete disclosures around the “collaring” of market orders — i.e., converting market orders into limit orders, which in some cases caused customers to re-enter trades at inferior prices.
- Velox Clearing fined: Velox Clearing LLC, a firm that provides clearing services for domestic broker-dealers and foreign financial institutions, was fined $1.3 million for allegedly failing to implement an effective AML program. FINRA’s findings state that the firm’s AML compliance program was not reasonably designed to address the firm’s high-risk customer base and those customers’ trading in volatile low-priced securities.
Taken together, these cases send a clear message: FINRA is not just policing major missteps — it is digging into how firms build and maintain the scaffolding of their AML frameworks, from data integrity and risk modeling to customer verification, disclosure and supervisory oversight.
Firms can take guidance from FINRA’s recent enforcement actions, and implement improved supervisory systems designed to address, among other things:
- Risk-scoring and vetting tools: Firms should ensure that AML inputs are accurate, ensure data flows are complete and periodically validate that the model performs as intended.
- Customer identification programs (CIPs): Don’t let gaps slide — thousands of improperly verified accounts proved expensive in the Robinhood case.
- Red flag monitoring and reporting: Suspicious activity reports are still a key compliance trigger; firms should ensure detection engines, investigations and escalation paths are functioning and well-documented.
- Supervisory and IT systems: Delays, latency issues or technological bottlenecks raise red flags.
These recent developments suggest that firms should reassess their AML programs not just for obvious compliance gaps, but for hidden structural weaknesses. If these past cases are a guide, expect firms to face probes not only into discrete violations, but into the architecture of their AML and client onboarding systems.
First Reforms Roll Out Under FINRA Forward
We reported previously about FINRA Forward, a series of initiatives rolled out by FINRA earlier this year as part of an effort to modernize FINRA’s rules and regulatory framework.
More recently, FINRA has begun to translate its FINRA Forward initiative into concrete rule changes. The first major reform came on August 15 with Regulatory Notice 25-09, which gives firms a new option for delivering key disclosures electronically through FINRA’s FinPro Gateway.
Starting November 3, 2025, member firms and associated persons may choose to use FinPro Gateway to deliver and access Form U4 (Uniform Registration Form); Form U5 (Termination Notice for Securities Industry Registration); and predispute arbitration disclosures required by FINRA Rule 2263.
The change is designed to streamline compliance, cut down on paper processes and provide individuals with a centralized, secure digital location for important registration and arbitration documents. To use the new option, an associated person must maintain a validated email address, acknowledge electronic delivery and be properly notified by their firm. Traditional delivery methods remain available for those who prefer them.
While other FINRA Forward proposals remain under review, Regulatory Notice 25-09 is the first to move from concept to implementation. It reflects the initiative’s broader goals of modernizing outdated requirements and empowering firms to use technology in compliance processes.
FINRA Launches New Crypto and Blockchain Education Program
FINRA is rolling out a new Crypto and Blockchain Education Program this fall, designed to equip member firms with the knowledge and tools needed to navigate the fast-moving world of digital assets. The initiative is also part of FINRA Forward and reflects growing demand from firms for practical training on crypto assets and blockchain technology.
In a recent episode of the FINRA podcast “FINRA Unscripted,” Jason Foye, Chief of FINRA’s Crypto Hub, explained: “We saw an opportunity here to empower member firm compliance and combat crypto-related fraud by broadening the blockchain and crypto asset knowledge base of member firms and associated persons.”
The program blends self-paced e-learning with an in-person course developed in partnership with Georgetown University’s McDonough School of Business. Rowan Job-White, FINRA’s Director of Critical Skills and Capabilities Training, noted that the in-person component follows the successful model of FINRA’s Certified Regulatory and Compliance Professional Program (CRCP): “We’re following that highly successful CRCP model and emulating its features to build a new program focused on the ins and outs of the crypto ecosystem and blockchain technology.”
The online courses will take learners through three levels of content — foundational, intermediate, and advanced. Job-White emphasized accessibility: “At each level of e-learning, the courses explain crypto and blockchain concepts in easy-to-understand terms. That’s really important with this highly technical content.”
The program will be delivered through FINRA’s Financial Learning Experience Platform (FLEX), launched in July 2024. As Genay Glasgo, Director of Continuing Education Services, explained: “FLEX is a centralized continuing education platform that FINRA member firms have the option to leverage as a tool for delivery of their firm element training programs or other training needs.”
With crypto markets and regulations evolving rapidly, FINRA views this program as a way to keep firms ahead of the curve. Glasgo confirmed that the foundational e-learning courses will be available to subscribing member firms beginning in October 2025.
