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Santos-Buch v. Financial Industry Regulatory Authority, Inc.

United States District Court, S.D. New York

July 8, 2014

ALAN SANTOS-BUCH, Plaintiff,
v.
FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC., Defendant

Filed July 7, 2014

Page 476

[Copyrighted Material Omitted]

Page 477

For Plaintiff: Eric W. Berry, Esq., Eric W. Berry, PC, New York, NY; Paul R. McMenamin, Esq., McMenamin Law Group, New York, NY.

For Defendant: Terri L. Reicher, Esq., National Association of Securities Dealers, Office of General Counsel, Washington, DC.

OPINION

Page 478

OPINION AND ORDER

Shira A. Scheindlin, United States District Judge.

I. INTRODUCTION

Alan Santos-Buch brings this action for breach of contract and invasion of privacy against the Financial Industry Regulatory Authority (" FINRA" ).[1] Santos-Buch seeks (1) a declaratory judgment to prohibit notice of a 1997 FINRA disciplinary action as a WebFile, (2) removal of the 1997 notice of disciplinary action from FINRA's BrokerCheck database, (3) a judgment permanently enjoining FINRA from disclosing Santos-Buch's disciplinary action in responses to inquiries it receives on its BrokerCheck database, (4) damages for breach of contract, and (5) damages for invasion of privacy.[2] Santos-Buch seeks both compensatory and punitive damages related to these claims.[3] FINRA now moves to dismiss the Amended Complaint arguing that the Court lacks subject matter jurisdiction to hear this case because Santos-Buch has failed to exhaust his administrative remedies.[4] For the reasons set forth below, FINRA's motions to dismiss are GRANTED.[5]

II. BACKGROUND

A. The Parties

1. FINRA

FINRA is a self-regulated organization

Page 479

(" SRO" ) incorporated in Delaware.[6] Under the Maloney Act of 1938, FINRA is registered with the SEC as a national securities association.[7] FINRA was established in 2007 to assume the member firm regulatory functions of the National Association of Securities Dealers, Inc. (" NASD" ) and the New York Stock Exchange.[8] FINRA is the successor to and has assumed the legal responsibilities of the regulatory subsidiary of the NASD, NASD Regulation, Inc. (" NASDR" ).[9]

2. Alan Santos-Buch

From 1986 through 1996, Santos-Buch was a Series 7 licensed registered financial services advisor (stockbroker) employed by several members of the NASD.[10] As an employee of NASD registered firms, Santos-Buch was subject to the NASD's disciplinary rules.[11] Santos-Buch has not been employed by any NASD registered firm since 1996.[12]

B. The Central Registry Depository and BrokerCheck Databases

FINRA is required to maintain registration information, including records related to disciplinary proceedings.[13] FINRA maintains the necessary information in a computer database called the Central Registry Depository (" CRD" ).[14] The Securities Exchange Act (" Exchange Act" ) requires that certain aspects of a representative's CRD file be made available to the public through BrokerCheck.[15]

On December 18, 1998, the NASDR submitted a proposal to make a portion of the CRD's registration information available on the Internet.[16] The SEC approved the proposal, and on August 16, 1999, the NASDR made certain BrokerCheck information available on the Internet.[17] To obtain BrokerCheck information one must go to FINRA's website, submit an information request form, and agree to FINRA's terms of service.[18] In addition, to obtain information on a representative whose ...


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