FINRA Defense Lawyers

What is FINRA?

FINRA stands for the Financial Industry Regulatory Authority. It’s a private organization that regulates brokerage firms and exchange markets in the United States. FINRA can investigate brokers, brokerage firms, and other financial professionals for potential violations of FINRA rules or federal securities laws.

Dealing with a FINRA investigation can be stressful and intimidating. But it’s important to remember that you have rights and options for defending yourself.

Common Reasons for a FINRA Investigation

FINRA has broad authority to investigate potential violations of its rules and securities laws. Even minor compliance issues can trigger an investigation. There are many reasons FINRA may open an investigation, including:

• Customer complaints about unauthorized trading, misrepresentation, or other misconduct
• Allegations of insider trading, market manipulation, or other market abuses
• Failure to disclose outside business activities
• Engaging in private securities transactions without firm approval
• Sharing in customer losses or profits of trades
• Churning or excessive trading in customer accounts

The FINRA Investigation Process

If FINRA opens an investigation into your activities, here’s what you can generally expect. This process can take months to conclude. It’s important to take it seriously from the start.

Receiving Documentation Requests

You’ll receive a request for information (RFI) asking you to provide documents and written responses about the issues under investigation.

On-the-Record Testimony

FINRA may also request on-the-record testimony (OTR) where you answer questions under oath.

Firm Notification and Document Production

Your firm will be notified of the investigation and required to produce relevant documents.

Evidence Review and Determination

FINRA will review all evidence collected to determine if rules were violated. If violations are found, FINRA may issue a Cautionary Action Letter, fine, suspension, bar, or refer the case for enforcement action.

DEFENSE TEAM SPOTLIGHT

Todd Spodek

Lead Attorney & Founder

Featured on Netflix's "Inventing Anna," Todd Spodek brings decades of high-stakes criminal defense experience. His aggressive approach has secured dismissals and acquittals in cases others deemed unwinnable.

NY Bar Admitted Multi-State Licensed Federal Courts

Meet the Full Team

Responding to a FINRA Investigation

If you receive notice of a FINRA investigation, you should immediately contact experienced legal counsel. Responding appropriately requires experience with FINRA’s rules and procedures. Skilled counsel can help protect your rights. Here are some tips for responding:

Legal Scenario: What Would You Do?

Scenario

You receive a letter from FINRA stating that you are the subject of a formal investigation into alleged unauthorized trading in several client accounts at your brokerage firm. The letter references potential violations of FINRA Rules 3260 and 2010, and demands you appear for on-the-record testimony within 30 days.

Should I cooperate with FINRA's investigation or can I refuse to testify, and what are the consequences either way?

Attorney's Answer

Under FINRA Rule 8210, registered representatives are obligated to cooperate with FINRA investigations, including providing testimony and producing documents — refusing can result in an automatic bar from the securities industry. However, cooperating does not mean going in unrepresented; you have the right to have experienced FINRA defense counsel present during your on-the-record testimony to protect your interests. An attorney can help you navigate the critical distinction between your FINRA cooperation obligations and your Fifth Amendment rights, particularly if the conduct under investigation could also trigger parallel SEC enforcement actions or criminal charges under federal securities laws. Early legal intervention is essential because statements you make during FINRA proceedings can potentially be used against you in subsequent civil or criminal matters.

This is general information only. Contact us for advice specific to your situation.

• Do not ignore or delay responding to an RFI. There are strict deadlines for producing documents and information.
• Be truthful in all written responses and OTR testimony. Any false statements can lead to criminal charges.
• Gather and preserve all potentially relevant documents, emails, text messages, and phone records.
• Consult with counsel before submitting any written responses.
• Prepare thoroughly for OTR testimony and conduct mock sessions.
• Do not attempt to coach other witnesses or coordinate stories.
• Assert your Fifth Amendment rights if necessary to avoid self-incrimination.

FINRA Defense Strategies

If violations are alleged, possible FINRA defense strategies include:

Attacking Customer Complaint Credibility