Appeal of SEC decision dismissed as too early

The appeal of the Securities and Exchange Commission (SEC) decision in the case involving Frank Harmon Black and Southeast Investments N.C. Inc. has been dismissed as premature. The SEC remanded a part of the Financial Industry Regulatory Authority Inc.’s (FINRA) decision back to the authority for further proceedings, making the order not final and, therefore, not reviewable by the court of appeals.

In this disciplinary proceeding against Black and Southeast, FINRA found that their conduct had violated FINRA rules. Black and Southeast appealed this decision to the SEC. The SEC affirmed part of FINRA’s decision but remanded the issues of false testimony and fabricated documents back to FINRA for further evaluation. The SEC emphasized the importance of producing investigatory emails and granted Black the right to additional evidence development or adverse inference against FINRA.

The court of appeals only has jurisdiction to review final orders by the SEC. While the term “final order” is not defined in the statute, the court has established that it refers to final agency actions. Precedent states that the court lacks jurisdiction over orders that remand a case or a portion of it back to a lower tribunal for further proceedings. Despite the SEC’s argument that certain issues in the SEC decision could be considered final orders, they do not align with the criteria of finality as they do not impose immediate legal consequences on Black and Southeast.

The sanctions imposed by the SEC were not effective immediately and did not resemble an injunction, rendering them not subject to immediate review by the court of appeals. The SEC’s decision remanded the case back to FINRA for further proceedings, allowing Black and Southeast to challenge FINRA’s decision in upcoming hearings. Any legal consequences from the SEC decision will only be reviewable once the entire case is resolved.

Black and Southeast will have to await the conclusion of the proceedings in FINRA before having the opportunity to bring the case before the court of appeals. Until then, they are not entitled to petition for review as the SEC’s decision did not impose any legal obligations or consequences on them. The fines and sanctions imposed by FINRA have been stayed pending the outcome of the proceedings, subsequent administrative appeal proceedings, and further judicial review.

In summary, the premature appeal of the SEC decision in the case involving Black and Southeast has been dismissed. The court of appeals lacks jurisdiction to review non-final orders, and Black and Southeast will have to wait until the conclusion of the proceedings in FINRA to potentially seek review of the final agency action by the court of appeals.