FINRA has no power to take anyone to court to make them pay their fines, a New York appellate court has ruled.
The decision handed down yesterday reverses earlier arguments that FINRA was within its rights whenever tried to enforce its financial punishments.
Instead, the judges say, FINRA has no authority whatsoever to bring non-payers to court.
FINRA is weighing its options.
The judges were also not happy with the regulator's ability to ban wrongdoers from the industry, calling it "draconian," but let it stand.
In theory, banned brokers can return to business if they pay their fines, so this can still be used as a stick to get people to cough up the cash.
As a result, formal lawsuits were always rare.