Except in extreme cases, abuses by stockbrokers and other securities firms are not directly regulated by the SEC. Regulation is delegated to a private, industry-controlled body called the Financial Industry Regulatory Authority (FINRA). Not surprisingly, a firm has to be caught red-handed to get more than a slap on the wrist.

The first self-regulatory institution with quasi-public functions was the New York Stock Exchange, which set its own rules for its members beginning in the 19th century. FDR’s New Deal succeeded in introducing some forms of public regulation but did not have the votes to supersede self-regulation entirely. In 1939, the SEC officially blessed the first new self-regulatory organization, the National Association of Securities Dealers, which was both a trade association and self-regulator, and later sponsor of the NASDAQ exchange.

Now FINRA, the successor to NASD, has tried to take the rare step of expelling a Utah-based broker called Alpine Securities for misusing customer funds, engaging in unauthorized trading, charging unwarranted fees, and flagrantly violating a host of other basic compliance rules. FINRA also ordered Alpine to pay restitution to customers.

But Alpine fought back and sued FINRA. And here’s the best part. Alpine’s lawsuit charges that the delegation of regulatory authority to a private entity is unconstitutional—an argument that progressives like me have been making for years. And Alpine got a Trump-appointed D.C. Circuit Court judge, Justin Walker, to issue an injunction to block FINRA from carrying out its order while the case is litigated.

Walker’s opinion expressed support for the contention of unconstitutional delegation. "Despite seeming to exercise the executive authority of the United States, FINRA hearing officers remain private employees," he wrote. This argument of unconstitutional delegation has also been made, in other similar contexts, by Trump Supreme Court appointee Brett Kavanaugh. Walker served as Kavanaugh’s clerk.

Now, Wall Street is piling on. "It’s not just about FINRA, it’s about the entire self-regulatory organization regime. It’s illegal—period," American Securities Association President and CEO Chris Iacovella told Politico.

Welcome to the club, fellas, and be careful what you wish for. The remedy, of course, is to shut down FINRA and other self-regulatory organizations, and restore this authority directly to the SEC, as Roosevelt wanted to do in the first place.

But that fundamental reform is easier said than done. After the Enron scandal took down its corrupt enablers in the accounting profession, Congress passed the Sarbanes-Oxley Act of 2002, taking self-regulatory authority away from the American Institute of Certified Public Accountants, like FINRA a combination of trade association, lobbyist, and mostly captured regulator.

But even in the wake of Enron, the best Congress could do was to create a Public Company Accounting Oversight Board (PCAOB), which is a hybrid. It’s a nonprofit public corporation and not literally part of the SEC—it’s a dot-org, not a dot-gov—but it’s tougher than FINRA.