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January 11, 2012


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Nicholas J. Wagoner

Great question. One preliminary note: earlier this month the Supreme Court declined to hear Standard Investment Chartered, Inc. v. NASD without comment. True, the Second Circuit's 2011 decision in that case--that SROs are immune as "quasi-government regulators" with respect to actions that are "incident to the exercise of [its delegated] regulatory power"--still stands as a result. The Supreme Court, however, has yet to rule on the issue.

So to answer your question about whether FINRA's recognized immunity "means [that it is] now a government body," it depends. Since there is a circuit split over the issue, the answer to your question first depends on which circuit FINRA is acting in. Second, whether FINRA qualifies as a "governmental entity" for purposes of governmental immunity depends on whether FINRA is actually performing its regulatory, prosecutorial, or disciplinary functions (2d, 9th, 11th, & D.C. Circuits), merely acting "incident to" these functions (2d Circuit), or acting in its private capacity. Standard Chartered summarized this conflict of law in its petition for cert filed with the Supreme Court.

john busacca

Sorry, but FINRA has now been declared Immune by the US Supreme court in Standard Chartered v NASD...so if they have that immunity does that mean they are now a government body or not?

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