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Mar 26, 2018

FINRA Defense Lawyers

The skilled FINRA defense lawyers at the Spodek Law Group can provide advice and help when responding to FINRA enforcement inquiries and FINRA actions. We have over 40 years of experience, and have immense knowledge handling FINRA issues. We offer a risk free consultation, and are here to help you – regardless of whether you’re an institution, small/medium sized company, or broker. 

We can handle all aspects of the enforcement process, including, but not limited to:

• Evaluating, and helping you develop defenses rooted in facts
• Helping you prepare written statements in response to allegations
• Analyzing the FINRA guidelines and published SEC and FINRA decisions to develop legal decisions based on precedents
• Preparing you for a FINRA on the record interview, and acting as your counsel during it
• Answering, and defending, against disciplinary complaints
• Negotiating a potential settlement through a Letter of Acceptance, Waive and Consent
• Litigating on your behalf at a FINRA disciplinary hearing

Irrespective of what your issue is, our FINRA defense lawyers can guide you and assist in you preparing and drafting responses. We can help prevent a FINRA inquiry from turning into a formal investigation and disciplinary action.

FINRA Rule 8210 Defense Lawyers

The FINDA defense attorneys at the Spodek Law Group understand how to help brokers, and financial advisors, navigate FINRA rule 8210 enforcement process. If you have just received a letter from a FINRA investigator who is conducting an inquiry into something you did – this should not be ignored. The inquiry letters are made under FINRA rule 8210. They require a member, a person associated with the member, or anyone else subject to FINRA’s jurisdiction to provide information either orally, or in writing, or electronically. It also authorizes FINRA to take the person’s testimony in an on the record interview. If you fail to comply with the information and documents requested by FINRA under Rule 8210, it can lead to sanctions like fines, suspensions, or even being barred from the industry. If your FINRA inquiry was the result of a termination, the inquiry can result in a significant burden on any new, or pending, transition to a firm.

Why did you receive the FINRA inquiry?

In addition to terminations, or separation of employment, financial advisors can receive inquiry letters based on a variety of circumstances. Some common events include:

• Customer Complaints
• Arbitrations and Regulatory Actions
• Form U4 and U5 disclosures, such as:
  • Criminal Charges and Convictions;
  • Liens, Bankruptcies, and Compromises with Creditors;
  • Outside Business Activities; and
  • Regulatory Actions.

FINRA Overview

The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for United State’s securities industry. Its main purpose is to protect investors by ensuring that there is integrity and fairness in all stock market deals. All securities firms whose activities are not regulated by other self-regulatory organizations are required to join FINRA.

Initially, securities firms were monitored by the National Association of Security Dealers (NASD) and the New York Stock exchange Regulatory Committee. This brought about difficulties as sometimes, the two bodies would draft overlapping or contradicting rules. It was also costly to run two regulatory authorities. The two institutions were therefore consolidated into Securities Industry Regulatory Authority (SIRA). The body was later renamed to FINRA.

FINRA is based in Washington DC and New York. It also has more than 20 regional office throughout the United States. Today, FINRA regulates more than 4500 brokerage firms. It also oversees more than 500,000 registered security representatives. The body mainly raises funds through annual members’ contributions, and assessment of applicants and registered security representatives. It also earns income from fines levied on firms that break the rules.

What does FINRA do?

The specific duties performed by FINRA are listed below.

Writing and enforcing rules

Before brokerage firms are allowed to operate in the USA, they must satisfy FINRA licensing requirements. The requirements are prescribed to prevent rogue brokers from joining the industry. FINRA also evaluates whether securities firms are in compliance with the rules of other bodies such as the federal government and the Municipals Securities Rulemaking Board.

To ensure compliance with its rules, FINRA administers a mandatory qualification examination for all brokers. Passing the exam is part of the licensing requirements. Besides this, the body also conducts continuous assessments.

FINRA has a team of financial examiners. The auditors routinely review the brokerage firms to identify risks and non-compliance. They also investigate complaints from the public and other regulatory bodies. FINRA mandate goes beyond just examining the financial records. For example, every year, it reviews more than 100,000 promotional materials. It also monitors the communication between brokerage firms and investors.

Punishing non-compliant firms

If brokers fail to comply with the set regulations, FINRA can fine, suspend, or expel them from the industry. It can also order them to compensate investors who have incurred losses due to the non-compliance. In 2016, FINRA closed 1434 disciplinary cases. These cases resulted in more than $ 170 million in fines and compensation of about $28 million to investors.

Arbitration

Many agreements between investors and brokerage firms contain a mandatory arbitration clause. Under the agreement, both parties relinquish the right to trial in a court of law. Many disputes in the securities industry are, therefore, resolved through arbitration.

FINRA provides the largest arbitration platform in the US securities industry. It handles almost all the conflicts between investors and brokerage firms, brokerage firms and employees, and one brokerage firm and the other. In rare cases, FINRA resolves disputes among investors.

Educating investors

FINRA avails various educational tools and resources to investors. The materials include investor alerts, online calculators, scam alerts, and industry news. These tools are meant to help investors make informed decisions. Educating the public on how the securities industry work is one of the measures that FINRA has taken to reduce financial fraud which is rampant in the sector.

Detecting market risks and fraud

FINRA has deployed several technological tools that analyze billions of stock market transactions every day. The rigorous data analysis is an effort to detect abnormalities in the trading patterns. In 2016, the body identified more than 750 fraud cases.