Receiving a FINRA rule 8210 notice can be gut-wrenching. The notice means that FINRA is about to start an inquiry into your conduct. There are many reasons why FINRA would want to investigate you. Some of these reasons are complaints from clients and other industry players, unusual activity in the accounts of your clients, and a request made by your current or former firm to FINRA to investigate you for misconduct. Under Rule 8210, FINRA has a right to subpoena you, require you to make a written or oral submission, and compel you to avail documents relevant to the inquiry:
“For the purpose of an investigation, complaint, examination, or proceeding authorized by the FINRA By-Laws or rules, an Adjudicator or FINRA staff shall have the right to require…a person associated with a member…to provide information orally, in writing, or electronically…and to…inspect and copy the books, records, and accounts of such…person with respect to any matter involved in the investigation, complaint, examination,or proceeding”
It is important to note that responding to a Rule 8210 notice is mandatory. Many people mistake FINRA for a government institution. FINRA is a private institution. Therefore, it is not governed by the Fifth Amendment. That means that you cannot fail to respond to a Rule 8210 notice and claim protection under the Fifth Amendment. FINRA rules state explicitly that is obligatory on every person to respond to a Rule 8210 notification:
“No member or person shall fail to provide information or testimony or to permit an inspection and copying of books, records, or accounts pursuant to this Rule.”
Failure to respond to a rule 8210 notice attracts severe penalties. Normally, FINRA will suspend you for an initial 90 days. The 90-day window is a chance for you to cooperate with the investigators and reverse the suspension. Failure to cooperate with the investigators during the 90-day window will lead to a permanent ban. A FINRA ban means that you will not be able to offer financial advisory services in the USA.
The prospect of a FINRA ban or hefty fines is enough to send chills down the spine of the strongest man. Nevertheless, after receiving a FINRA Rule 8210 notification, the best reaction is to be confident and composed, no matter how ominous the allegations against you might be. Thousands of financial advisors have survived FINRA inquiries in the past. Furthermore, Rule 810 notifications are usually sent regarding an informal investigation. The informal investigations are rarely reported on one’s form U4. By issuing a Rule 8210 notification, FINRA is trying to establish whether you have violated any industry rules and regulations. They are examining whether the allegations about you are strong enough to sustain a formal inquiry.
How you respond to the rule 8210 notification is important. Your response determines whether FINRA will escalate the inquiry into a formal investigation, a situation you should be desperate to avoid because it will be recorded on your form U4. The best actions to take after receiving a FINRA Rule 8210 notice are discussed below.
FINRA will most likely copy the Rule 8210 notice to your firm. But before the notice reaches them, it is good to inform them about the inquiry. If you don’t, they might assume that you are attempting to cover up something. It will also help them prepare how to handle the case as a firm. Finally, informing the firm will make it easier for you to obtain critical documents from the firm and other relevant authorities.
FINRA subpoenas have very short response deadlines. Luckily, FINRA extends the deadline in most instances. Getting an extension is however not guaranteed. Therefore, you should use polite language and explain coherently why you need more time in your extension request. For example, you could say you need more time to obtain the required documents and seek legal counsel. Failure to secure a deadline extension might be an indication that the charges against you are serious.
This might be one of the most important step in the process. In fact, it is advisable to contact an attorney immediately after receiving the notice so that he/she can guide you through the other steps. If you work with a seasoned FINRA defense attorney, things that seem difficult will turn simple. This is because the attorney will most likely have covered hundreds of similar cases in the past. Furthermore, experienced FINRA defense attorneys often work with FINRA lawyers and employees. They therefore understand the in and outs of FINRA disciplinary proceedings. You can also hire a general defense attorney, but such a decision can turn costly in terms of the time used and the outcome of the case.
Besides documents in your possession, FINRA has the authority to request documents in your custody and control. After seeking legal counsel, it is now time to locate and obtain all the requested documents. Avoid working too close to the deadline. Utmost honesty is required when producing the requested documents. Avoid forgery. Bear in mind that FINRA may already have obtained the documents from other parties. They will, therefore, easily detect forgeries and alterations. Dishonesty at this stage will poke holes in your credibility.
This is the penultimate and most crucial step in the process. Of all the steps we have covered, this step has the highest potential to change the direction of your case. During this step, you should work hand in hand with your FINRA defense attorney. A good response should not only answer the questions answered but also defend your actions. You should show why the charges against you are defective and exaggerated. Furthermore, you should coherently explain what happened during the events mentioned in the charges. Provide support documents where necessary.
Wait for FINRA to respond. The response can be another Rule 8210 notice asking for more documents or support information. Don’t be anxious. Sometimes, especially when the charges are not serious, FINRA can take up to six months to respond.
At Spodek Law Group, we have a team of dedicated FINRA Rule 8210 lawyers. These attorneys have handled numerous FINRA-related cases in the past. They will work tirelessly to deliver the best possible outcome in your case. To accrue the benefits of our distinguished legal services, contact us today.
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