Publication Date



Traditionally, the U.S. securities exchanges were self-
regulated, governing trading, setting rules, and carrying
out disciplinary procedures against member trader-
brokers. In the past five decades, however, the SEC has
divested the exchanges of their regulatory authority,
transferring it to independent, private bodies.
Concomitantly, the SEC's ability to control the rule-
making and enforcement powers of these private bodies
has increased. Recently, this process culminated in the
creation of FINRA, a monopolized, private self-regulatory
organization (SRO) under comprehensive SEC control
responsible for regulating the entire U.S. secondary
securities market. The SEC's ever-growing control over
securities SROs has called into question whether the
regulation of U.S. securities professionals remains a
private enterprise free from the constitutional constraints
on public actors. -
This question-whether SROs are private or public
actors-has generated a circuit split so convoluted that
many courts have misinterpreted it, as the Eleventh
Circuit's recent opinion in Busacca reveals. Properly
understood, however, this Note argues that the pre-FINRA
SRO state action cases signal very little about whether
FINRA should be deemed a public actor. Yet these cases
speak volumes about what effect a state actor
determination would have on disciplinary procedures at
FINRA. Combined with the statutory framework of the

Exchange Act, these decisions strongly support the
conclusion that constitutionally adequate process is
already guaranteed (and is usually provided) in FINRA's
disciplinary actions. As a result, securities professionals
may find a judicial ruling requiring constitutional due
process difficult to obtain and ultimately ineffective to
secure member trader-brokers additional protections in
FINRA's disciplinary actions.