Alpine Securities backtracks in case against FINRA regarding Zoom hearing
Shortly after Alpine Securities Corp. brought an action against the United States Financial Industry Regulatory Authority (FINRA) over the use of Zoom videoconferencing for a disciplinary matter hearing, Alpine has backtracked on some of its claims.
This happened after the Court issued an order and FINRA replied to Alpine’s motion for a preliminary injunction.
On November 10, 2020, Alpine filed the motion for a preliminary injunction against FINRA. The motion requested that the court enter an order enjoining FINRA from conducting a disciplinary hearing by video conference, rather than in person. The motion argued that Alpine would suffer irreparable harm if the hearing were to proceed by video and that the harm was imminent because the hearing was scheduled for November 30.
On November 17, 2020, FINRA filed its opposition to Alpine’s motion for injunctive relief. Attached to the opposition was the order from FINRA postponing the November 30 hearing. Given the foregoing development, the court vacated the hearing scheduled on Alpine’s motion set for November 24, 2020.
On November 19, 2020, Alpine confirmed that, because FINRA “on Monday evening reversed course and directed reconsideration of its prior orders, Alpine is withdrawing without prejudice its Motion for Preliminary Injunction”.
Let’s recall that this case is about an order forcing Alpine to use Zoom as a part of disciplinary proceedings. In August 2019, FINRA’s Department of Enforcement (DOE) instituted a disciplinary proceeding against Alpine, concerning whether the company had charged “unreasonable” or excessive fees. FINRA seeks by that proceeding to expel Alpine from FINRA.according to Alpine, virtual proceeding is not workable or appropriate in its case.
Alpine explains why Zoom videoconferencing is not suitable for the disciplinary proceedings brought against it by FINRA. The Hearing Officer ordered the parties to participate in an off-the-record test run on the Zoom platform, which occurred on June 18, 2020.
The Zoom test run was not without difficulty. During the presentation of documents, for example, the video frame displaying the witness is reduced to a thumb nail, making it difficult if not impossible to view the witness’s reaction and demeanor. The parties also encountered difficulties zooming in on certain aspects of document and using annotation features to draw the witness’s attention to a particular aspect of the document.
The limited remote testimony that was taken was difficult for both parties and witnesses, Alpine stresses. One witness timed-out of the videoconference in the middle of his testimony and the parties had to wait several minutes for him to rejoin, at which point the substantive topic had to be re-explored to ensure no testimony was lost.
Other witnesses could not hear questions or objections, nor could the Hearing Officer or the court reporter, requiring repetitive colloquies that both wasted time and burdened the record.
According to Alpine, because proceeding virtually is unnecessary and contravenes Alpine’s contractual, statutory and constitutional rights, Alpine deserved an “in person” hearing rather than a Zoom-based one.