FINRA Disciplinary Actions Lawyers

The Financial Industry and FINRA’s Role

The financial industry, including the stock and commodity markets across the globe, is very complex and important. Those that are skilled in the field may find that there are investment opportunities that can give them an unfair edge on the rest of the market. In some situations, these advantages can actually be illegal and regulatory bodies may want to take action. One organization that can take action against individuals and investment firms is the Financial Industry Regulatory Authority, which is commonly referred to as FINRA.

Today, FINRA is the largest independent regulation in the United States. The organization aims to protect investors by making sure that all investors, investment firms, and publicly traded companies operate ethically and within the law. While it is not officially linked to the SEC or other law enforcement industry, FINRA has the ability to set forth disciplinary actions that need to be taken seriously. Those that are charged with a disciplinary action could face a variety of potential penalties due to their past actions.

Issues Covered by FINRA

Overall, FINRA covers a variety of different issues that are of a concern to investors and the overall integrity of the markets. Some of the most common issues that FINRA will cover and investigate include fraud, misrepresentation, insider trading, and other illegal and unethical acts involving publicly traded securities and commodities. In most situations, FINRA will provide suggested disciplinary actions that people are suggested to follow.

Potential Penalties

In most cases, people that are provided with disciplinary actions set forth by FINRA will not have to face jail time. Most of these cases are handled outside of the courtroom and are settled outside of court. FINRA will generally set forth actions that are meant to discipline those that are guilty of certain acts.

Common Types of Penalties

Some of the most common penalties that FINRA will suggest will include financial penalties, suspension of trading rights, and even a permanent ban from being able to trade or work in the financial markets. They may also provide additional suggestions to an employer that can recommend terminating employment.

Referral to Federal Agencies

While FINRA cases are generally handled outside of the legal system, FINRA can still provide suggestions to the SEC, FBI, and other federal agencies. These agencies are then permitted to pursue additional charges that could include criminal felonies that could result in even further and more significant penalties than those that are set forth by FINRA.

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Legal Scenario: What Would You Do?

Scenario

You received a letter from FINRA stating that a formal disciplinary proceeding has been initiated against you for allegedly executing unauthorized trades in several client accounts. Your broker-dealer firm has already suspended you pending the outcome, and you are worried about losing your securities licenses and your career.

What should I do to protect my career and respond to this FINRA disciplinary action before it permanently damages my ability to work in the financial industry?

Attorney's Answer

You need to retain an experienced FINRA defense attorney immediately, as you typically have only 25 days to file an answer to a FINRA complaint under Rule 9215, and failing to respond can result in a default decision against you. Your attorney can challenge the allegations through the FINRA Office of Hearing Officers, negotiate a potential settlement through an AWC (Acceptance, Waiver & Consent) agreement, or prepare for a full hearing before a FINRA disciplinary panel. It is critical to preserve all communications, trade records, and client correspondence, as these will be central to your defense. Even if sanctions are imposed, you may have the right to appeal to the National Adjudicatory Council and ultimately to the SEC under Section 19(d) of the Securities Exchange Act of 1934.

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

FINRA Rules and Procedures

To ensure that all people are aware of what the FINRA rules are, the organization maintains and updates the FINRA Code of Procedure that is available for free online for all people and organizations to view. FINRA has a variety of different types of procedures and rules in place that will govern who can buy and sell securities and what processes needed to be met in order to do this in compliance with the law.

FINRA Hearing Process