FINRA Defense for Municipal Securities Violations
Contents
FINRA Defense for Municipal Securities Violations: A Comprehensive Guide
You’re here because you or your firm is facing potential violations related to municipal securities. Take a deep breath – this is a serious situation, but you’ve come to the right place. We’re going to walk through everything you need to know, step-by-step.First, let‘s get on the same page about what exactly municipal securities are. These are debt securities issued by states, cities, counties and other government entities to fund public projects or operations. The municipal securities market is massive – over $3.7 trillion in the U.S. alone.Now, what could possibly go wrong in such a tightly regulated market? Quite a bit, actually. The Securities and Exchange Commission (SEC) has been cracking down hard on violations through its Public Finance Abuse Unit. Some of the biggest areas they look at include:
- Offering and disclosure fraud
- Tax and arbitrage-driven fraud
- Pay-to-play and public corruption
- Public pension accounting issues
- Valuation and pricing manipulation
So, what do you do if you get hit with one of these things? Here‘s where we dive in.
Understanding the Charges
The first step is getting crystal clear on exactly what violations you‘re being accused of. The SEC doesn‘t mess around – they’ll come at you with dense legalese and complex securities regulations. Don‘t try to go it alone.Bring in an experienced securities defense attorney immediately. They’ll be able to decipher the charges, explain them in plain English, and start mapping out a defense strategy. Things like:
- Materiality of any alleged misstatements or omissions
- Evidence of intent or “scienter” behind the violations
- Statutes of limitations on the claims
- Potential sanctions like fines, trading prohibitions, etc.
Your lawyer is your lifeline here. Listen to their advice and provide full transparency about your situation and role. It‘s the only way they can properly defend you.
Building Your Defense
Once you understand the lay of the land, it’s time to start building a comprehensive defense. This is where things can get complicated, fast. You’ll likely need to:Gather Evidence and DocumentationFrom emails and memos to trading records and financial statements – every shred of paperwork related to the dealings in question will be critical. Don‘t count on your firm having everything neatly organized either. You may need to do some serious digging and document collection.Interview Witnesses and Parties InvolvedYour attorney will want to talk to anyone with potential knowledge about what went down. Coworkers, supervisors, clients – leave no stone unturned. The goal is to understand every angle and uncover any contradicting narratives.Retain Expert WitnessesComplicated securities cases often require expert analysis and testimony. This could include forensic accountants, economists, regulatory experts and more. Their credibility and evidence will be crucial.Analyze Regulatory Guidance and Legal PrecedentSecurities law is a complex, ever-evolving beast. You’ll need to pour through reams of regulatory releases, staff guidance, legal decisions and more. Identifying contradictions, ambiguities or mitigating factors could be key.Negotiate With RegulatorsIn many cases, you’ll want to pursue settlement negotiations with FINRA or the SEC in parallel to building a defense. An experienced attorney will know how to leverage evidence and legal arguments to push for the best possible terms.It’s a lot, but you need to be prepared to go all-in on your defense. Half-measures could leave you exposed to devastating penalties and sanctions.
Understanding Potential Penalties
Which brings us to the stakes. What exactly are you facing if found guilty of municipal securities violations? It depends on the severity, but it could include:
- Temporary or permanent ban from the securities industry
- Revocation of securities licenses and registrations
- Substantial monetary fines and penalties
- Potential criminal liability in extreme cases
- Irreparable reputational damage
Those are the cold, hard facts. The sanctions can completely derail careers and shutter businesses. It’s why mounting an aggressive defense from day one is absolutely critical.
Protecting Your Rights
As you navigate this situation, it’s also crucial to understand and protect your rights at every turn. This includes:The Right to Remain SilentAnything you say can and will be used against you. Don’t make any statements – even seemingly innocuous ones – without your lawyer present. FINRA and the SEC are looking to build cases, not help you.The Right to Demand Due ProcessYou have the right to proper notification of charges, timely hearings, evidence sharing and more. Don’t let regulators violate these or any other constitutional protections.The Right to Vigorous RepresentationYou’re entitled to legal counsel at all stages of any investigation or enforcement action. Make sure you have a relentless advocate in your corner, not just a warm body going through the motions.The Right to Appeal Adverse DecisionsIf things don’t go your way, you have the right to exhaust all appeals processes and challenges. Having an experienced appellate lawyer involved from the start is wise.Your rights may seem obvious, but they’re easily violated if you don’t understand them fully. Let your legal team guide you on properly invoking and protecting them.
Choosing the Right Legal Team
Speaking of legal teams, who you have representing you matters immensely. When your career and livelihood are at stake, you need absolute best-in-class counsel. Some key criteria:Proven Securities Law ExperienceYou want attorneys who have been in the trenches of high-stakes securities cases for years, if not decades. This is not the time for on-the-job training.Deep Regulatory KnowledgeYour legal team should have an intimate understanding of how regulators like FINRA and the SEC operate. Former employees or prosecutors can be invaluable assets.A Tough, Aggressive MindsetYou need pitbull litigators who will fight tooth and nail to protect your rights. This isn’t a game. You want a team that matches the regulator’s intensity.Comprehensive SupportSecurities cases are complex, wide-ranging affairs. You’ll want a full-service firm with teams of lawyers, investigators, experts and staff to handle every aspect.Excellent CommunicationThis is a stressful, high-stakes scenario. You need attorneys who will keep you constantly informed in language you understand – no legalese allowed.Reasonable Fee StructuresTop-tier representation shouldn’t send you into bankruptcy. Look for firms that offer alternative fee arrangements and payment plans.Choosing a legal team is arguably the biggest decision you’ll make. Take your time, ask the right questions, and make sure they’re truly the best fit for your specific situation.
Unfortunately, securities violations can open you up to multiple fronts of legal jeopardy. It‘s critical your defense team has experience managing parallel:Civil and Criminal CasesWhile FINRA and the SEC bring civil charges, the Department of Justice can also initiate criminal prosecutions for securities fraud and other offenses. You’ll need a coordinated strategy.Federal and State CasesDepending on the violations, you could face actions from both federal regulators like the SEC and state-level authorities like the New York Attorney General’s office.Administrative and Court ProceedingsSecurities cases often involve administrative hearings before regulatory bodies as well as federal and state court actions. Each requires tailored approaches.Keeping all these moving parts on track and ensuring consistent defense theories is a monumental task. Make sure your lawyers have direct experience in this area.
Protecting Your Reputation
Even if you successfully fend off charges, the stain of a securities investigation or enforcement action can linger. Proactive reputation management is essential, including:Strategic Media RelationsYour legal team should work hand-in-hand with experienced PR professionals to control the narrative through the media and other channels.Online Reputation MonitoringIn today‘s digital world, a few negative articles or posts can decimate your online presence. You’ll need comprehensive monitoring and suppression tactics.