Think tanks and at least one brokerage firm have raised their eyebrows at how FINRA was created back in 2006, and now they want the Supreme Court to take a stand as well.
The issue for Standard Investment Chartered -- an investment bank and FINRA-regulated brokerage firm -- boils down to the self-regulatory firm's "sovereign immunity" to any legal liability related to its oversight duties.
This came up when NASD and NYSE Regulation merged in 2006.
Standard Investment Chartered argued at the time that NASD misstated the facts in order to get member firms to agree to the merger, which took away some of the rights of member firms in exchange for a cash payout.
However, judges have ruled that the merger was managed as a regulatory affair and so FINRA is theoretically immune to claims that their predecessor organizations handled it badly.
Now Standard Investment Chartered and groups like the Cato Institute and the Competitive Enterprise Institute are taking the case to the supreme court to clarify the situation.
They say the merger was a business deal, not a regulatory issue, and that as such U.S. law applies.
If the supreme court rules in their favor, all firms regulated by NASD at the time could get cash compensation.
Whether that happens or not, the case underlines the "above the law" attitude that many advisors see at FINRA.
If the regulator is immune to all oversight, it's not hard to see why they haven't been eager to share much about their inner workings, how their people are paid, and issues like that.