John M. Fife v. Financial Industry Regulatory Authority, Inc.

For over 150 years, Congress has endowed district courts with “original jurisdiction over all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. When it passed the Securities Exchange Act of 1934 (the “Exchange Act”), Congress went even further, giving district courts the “exclusive jurisdiction” to determine violations of the statute. 15 U.S.C. § 78aa(a). In 2012, Respondent Financial Industry Regulatory Authority, Inc. (“FINRA”)—a “private” “not-forprofit” to which the United States Securities and Exchange Commission (“SEC”) has outsourced authority to police securities firms and professionals—purported to “suspend” and “bar” Petitioner John M. Fife because he refused to fly halfway across the country on one week’s notice to subject himself to FINRA’s interrogation. Nearly ten years later, the SEC instituted an enforcement action against Mr. Fife in the federal district court for the Northern District of Illinois on an unrelated matter and—relying on FINRA’s previous proclamations—accused Mr. Fife of being a “recidivist violator of the securities laws,” thereby triggering significantly higher sanctions if the jury finds Mr. Fife liable. In response, Mr. Fife sued in the federal district court for the Southern District of New York, bringing a single claim for declaratory judgment that FINRA’s suspension and bar are null and void. Both the district court and court of appeals rejected Mr. Fife’s claim, holding that Section 78y of the Securities Exchange Act of 1934 (the “Exchange Act”) stripped district courts of subject matter jurisdiction to decide whether FINRA’s “discipline” of Mr. Fife violated the Exchange Act.