ERIC S. SMITH v. UNITED STATES SECURITIES AND EXCHANGE COMMISSION, FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC., Intervenor. - Articles

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Posted by: Azya Thornton on Jun 16, 2026

Court: 6th Circuit Court (Published Opinions)

Attorneys 1: ARGUED: Russell G. Ryan, NEW CIVIL LIBERTIES ALLIANCE, Arlington, Virginia, for Petitioner.

Attorneys 2: ARGUED: Courtney L. Dixon, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Respondent.

Attorneys 3: ARGUED: Amir C. Tayrani, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C., for Intervenor.

Attorneys 4: ON BRIEF: Russell G. Ryan, NEW CIVIL LIBERTIES ALLIANCE, Arlington, Virginia, Robert Knuts, GUNGNIER LAW PLLC, Greenport, New York, for Petitioner.

Attorneys 5: ON BRIEF: Courtney L. Dixon, Caroline W. Tan, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., Rachel M. McKenzie, Daniel Staroselsky, UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Washington, D.C., for Respondent. Amir C. Tayrani, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C., for Intervenor.

Judge(s): READLER, MURPHY, and BLOOMEKATZ, Circuit Judges

Court Appealed: On Petition for Review of an Order of the Securities and Exchange Commission

READLER, Circuit Judge. Legendary director Martin Scorsese’s highest grossing film, The Wolf of Wall Street, features the real-life trials and tribulations of Jordan Belfort, a hard- charging New York City stockbroker. After passing the Series 7 exam and qualifying to buy and sell securities, Belfort amasses enormous wealth as a broker, only to land in hot water with the Securities and Exchange Commission over his suspicious trading activity and other antics. See generally The Wolf of Wall Street, Netflix (Paramount Pictures 2013). For understandable cinematic reasons, the movie glosses over some of the finer points of the securities industry’s regulatory structure, including who administers the Series 7 exam. That job currently belongs to the Financial Industry Regulatory Authority, better known simply as FINRA. Among other securities-related rules FINRA puts forth, one set of regulations requires an applicant interested in taking the Series 7 exam (or a variety of other qualifying securities industry exams) to first register with FINRA or be associated with a FINRA member firm. Unlike Belfort, petitioner Eric Smith declined to register with the appropriate authorities. But like Belfort, he still ended up in the SEC’s crosshairs (albeit for entirely different reasons). Smith now seeks review of the SEC’s order upholding sanctions against him for violating a host of securities-related laws and administrative rules. He argues that FINRA lacked jurisdiction over him and that the proceedings before the SEC ran afoul of Article III and the Seventh Amendment. With respect to those latter issues, however, Smith failed to raise his constitutional arguments before the SEC, so we cannot reach them. And as to the threshold jurisdictional question, because FINRA had statutory jurisdiction over Smith despite his refusal to register, we deny his petition for review.

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