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Representing Brokers in FINRA Investigations into Insider Trading

Facing a FINRA Insider Trading Investigation? Here’s What You Need to Know

You’re a broker, working hard to build your career and reputation. But, one day, you get a letter from FINRA. It says they’re investigating you for potential insider trading violations. Your heart sinks. This is the stuff nightmares are made of for anyone in the financial industry.But, take a deep breath. We’re here to guide you through this process and protect your rights and career. At Spodek Law Group, we’ve handled countless FINRA insider trading investigations for brokers nationwide. We know exactly what to do to put you in the best possible position.

What is Insider Trading?

Before we dive into the FINRA investigation process, let‘s quickly define insider trading. It’s the illegal practice of trading securities based on material, non-public information about a companyHere’s a detailed overview from the SEC.For example, if you learned from an executive friend that their company was about to be acquired, and you traded the company’s stock before the news went public, that would be insider trading. It gives you an unfair advantage over other investors who don’t have access to that inside information.Insider trading is a serious offense that can lead to heavy fines and even jail time. That‘s why FINRA takes any allegations of it extremely seriously when it comes to brokers and other financial professionals they regulate.

The FINRA Insider Trading Investigation Process

So what exactly happens when FINRA launches an insider trading investigation against you as a broker? Here‘s a step-by-step look at their process:

1. The Inquiry Letter (FINRA Rule 8210)

It all starts with an ominous letter citing FINRA Rule 8210. This is essentially a demand for information and documents related to the potential insider trading allegations.FINRA has broad authority here. They can request any records, emails, texts, trade confirmations – anything they deem relevant to their investigation. And as a FINRA member, you‘re required to fully cooperate and produce what they ask for.This is a critical first step, so don‘t try to handle it alone. Having an experienced FINRA defense attorney to guide your response can make or break your case right from the start.

2. The On-the-Record (OTR) Interview

After reviewing the documents you produce, FINRA will likely request an on-the-record (OTR) interview with you. This is an interview conducted under oath, where you‘ll be grilled about the trading activities and any potential insider information.The OTR is a minefield. Everything you say can be used against you, not just in the FINRA proceedings, but potentially in criminal cases by the DOJ or SEC as well. That‘s why it’s absolutely vital to have legal representation to prepare you and be by your side during questioning.Your attorney can object to inappropriate questions, advise you on what to say or not say, and ensure your rights are protected throughout. Don’t ever go into an OTR alone.

3. The Wells Notice

If FINRA’s investigation convinces them that you likely engaged in insider trading, they‘ll issue you a “Wells Notice.” This outlines the specific charges and violations they intend to bring against you.Receiving a Wells Notice is a pivotal moment. You’ll have the chance to submit a “Wells Submission” explaining why the charges are unfounded or mitigated. This is your opportunity to present a vigorous defense before any formal disciplinary action.Having a skilled FINRA litigator craft your Wells Submission is crucial. They know exactly what evidence and arguments to present to give you the best shot at avoiding charges or minimizing potential sanctions.

4. Potential Charges and Sanctions

If your Wells Submission fails to dissuade FINRA, they can then formally charge you with insider trading and related violations. From there, the case proceeds to a disciplinary hearing before a FINRA panel.The sanctions for insider trading can be devastating for a broker‘s career. You could face a permanent bar from the securities industry, in addition to potential criminal charges, fines, and more.That’s why mounting an aggressive defense at this stage is absolutely paramount. Your attorney will fight tooth and nail, presenting evidence, examining witnesses, and doing everything possible to get the charges dismissed or reduced.

Christine Twomey
Christine Twomey
Just had my Divorce case settled 2 months ago after having a horrible experience with another firm. I couldn’t be happier with Claire Banks and Elizabeth Garvey with their outstanding professionalism in doing so with Spodek Law Group. Any time I needed questions answered they were always prompt in doing so with all my uncertainties after 30 yrs of marriage.I feel from the bottom of my heart you will NOT be disappointed with either one. Thanks a million.
Brendan huisman
Brendan huisman
Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!
Guerline Menard
Guerline Menard
Thanks again Spodek law firm, particularly Esq Claire Banks who stood right there with us up to the finish line. Attached photos taken right outside of the court building and the smile on our faces represented victory, a breath of fresh air and satisfaction. We are very happy that this is over and we can move on with our lives. Thanks Spodek law 🙏🏼🙏🏼🙏🏼🙏🏼🙌🏼❤️
Keisha Parris
Keisha Parris
Believe every single review here about Alex Z!! From our initial consultation, it was evident that Alex possessed a profound understanding of criminal law and a fierce dedication to his clients rights. Throughout the entirety of my case, Alex exhibited unparalleled professionalism and unwavering commitment. What sets Alex apart is not only his legal expertise but also his genuine compassion for his clients. He took the time to thoroughly explain my case, alleviating any concerns I had along the way. His exact words were “I’m not worried about it”. His unwavering support and guidance were invaluable throughout the entire process. I am immensely grateful for Alex's exceptional legal representation and wholeheartedly recommend his services to anyone in need of a skilled criminal defense attorney. Alex Z is not just a lawyer; he is a beacon of hope for those navigating the complexities of the legal system. If you find yourself in need of a dedicated and competent legal advocate, look no further than Alex Z.
Taïko Beauty
Taïko Beauty
I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence. Thank you team!
Anthony Williams
Anthony Williams
Hey, how you guys doing? Good afternoon my name is Anthony Williams I just want to give a great shout out to the team of. Spodek law group. It is such a honor to use them and to use their assistance through this whole case from start to finish. They did everything that they said they was gonna do and if it ever comes down to it, if I ever have to use them again, hands-down they will be the first law office at the top of my list, thank you guys so much. It was a pleasure having you guys by my side so if you guys ever need them, do not hesitate to pick up the phone and give them a call.
Loveth Okpedo
Loveth Okpedo
Very professional, very transparent, over all a great experience
Bee L
Bee L
Amazing experience with Spodek! Very professional lawyers who take your case seriously. They treated me with respect, were always available, and answered any and all questions. They were able to help me very successfully and removed a huge stress. Highly recommend.
divesh patel
divesh patel
I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.

Why You Need a Dedicated FINRA Defense Lawyer

It’s simple. Every single client deserves honesty and white glove service. Every single client should know what he, or she, potentially faces and what the outcome of their case could be – before hiring an attorney.Our lawyers have experience handling FINRA insider trading cases nationwide. We understand the severe consequences you’re facing, and we take that responsibility incredibly seriously. We’ll leverage our expertise to explore every possible defense strategy and protect your career and future.Most law firms implement a cookie cutter strategy in order to fight your case, and save their own time. They don‘t look carefully at your situation – they simply want to move on to the next case. At Spodek Law Group, we leave no stone unturned. We do everything possible to win. Everything we do is focused on getting you results.We understand the difficult and challenges of going through a FINRA insider trading case. If you’re accused, schedule a consultation with our attorneys today. The sooner we get involved, the better we can safeguard your rights and start building your defense.

Potential Defenses Against Insider Trading Charges

While insider trading cases are undoubtedly serious, it’s important to understand that you do have potential defenses available. An experienced FINRA defense attorney will explore all possible avenues, including:

Lack of Material Information
For insider trading to occur, the information you allegedly traded on must have been truly “material” – meaning it would impact a reasonable investor’s decision to buy or sell the securities. If the information was vague or speculative, you may have a defense.

Public Information
If the details you traded on were already publicly available, even if obscurely, that could defeat the insider trading claim. Your lawyer will scour disclosure filings and media reports to establish this.

No Breach of Duty
Insider trading requires a breach of fiduciary duty or other duty of trust and confidence. If you didn’t actually owe such a duty regarding the information, you may have grounds to dismiss the charges.

Lack of Evidence
FINRA has the burden of proving insider trading with substantive evidence beyond just the trades themselves. If they lack sufficient proof you had or acted on inside information, you could prevail.These are just some of the potential defenses. Every case is unique, which is why you need a FINRA litigator who will dive deep into the specifics of your situation to find the best path forward.

Insider Trading Investigations Are Time-Sensitive – Act Fast

One of the biggest mistakes brokers make when facing a FINRA insider trading investigation is waiting too long to get legal help. Every single day and interaction matters from the very first 8210 request letter.The sooner you have a veteran FINRA defense attorney actively protecting your interests, the better your chances of avoiding or minimizing potential discipline. Don‘t go it alone and risk making a mistake that could jeopardize your entire career.At Spodek Law Group, we’re proud to put our nationwide experience and relentless advocacy to work for brokers and financial professionals across the country. Our reputation speaks for itself, with testimonials from clients whose lives and careers we’ve helped save.If you‘re facing the unthinkable – a FINRA insider trading investigation – take the first step today. Reach out for a confidential consultation so we can start forging your defense immediately. Your future depends on it.

Anatomy of an Insider Trading Case: A Hypothetical Scenario

To better illustrate what a FINRA insider trading investigation looks like in practice, let‘s walk through a hypothetical scenario:

The Allegations

Michael is a successful broker at a major Wall Street firm. One day, he receives an 8210 request letter from FINRA. It alleges that six months ago, Michael purchased 25,000 shares of ABC Corp stock. Two weeks later, ABC announced they were being acquired at a 40% premium, causing the stock to skyrocket.FINRA’s letter claims Michael had inside information about the acquisition from a close friend who is an executive at ABC. It accuses him of illegal insider trading based on material, non-public information in violation of FINRA rules and federal securities laws.

Michael’s Response

Understandably shaken, Michael immediately consults the Spodek Law Group. We assure him this is far from an open-and-shut case against him. We get to work immediately, taking these steps:

  1. Respond to the 8210 Letter
    We carefully review Michael’s communications, trading records, and any other potentially relevant documents. After determining what to provide FINRA, we draft a thorough response and produce the requested materials – taking care to include appropriate objections and protect privilege.
  2. Prepare for the OTR Interview
    Sure enough, FINRA requests to interview Michael on-the-record shortly after. We spend weeks rigorously preparing him – reviewing his testimony, practicing questioning, and ensuring he understands what he absolutely cannot say that could incriminate himself.
  3. Investigate the Evidence
    In parallel, our team launches our own comprehensive investigation. We interview Michael’s friend at ABC Corp and review their communications to establish exactly what the friend knew and told Michael. We also analyze ABC’s own disclosures and media reports to determine how “non-public” the acquisition details truly were.
  4. Craft the Wells Submission
    As expected, FINRA eventually issues Michael a Wells Notice indicating their intent to charge him with insider trading. But we’re ready with a forceful Wells Submission poking holes in FINRA’s case theory:
  • The information Michael received was vague and speculative – not the clear, “material” details FINRA alleges
  • Certain details about the acquisition had already been reported in industry publications, so Michael did not trade solely on non-public information
  • Michael’s friend had no knowledge of the actual acquisition plans and thus did not breach any duties by sharing general industry “chatter”
  • FINRA has no direct evidence Michael traded because of any inside information – just the circumstantial fact that he made a profitable trade
  1. Prepare for a Hearing (If Needed)
    FINRA decides to proceed with charges despite our Wells Submission. But we’ve laid the groundwork to take this case to a full disciplinary hearing if needed. We’ll rigorously cross-examine FINRA’s witnesses, present our evidence, and fight tooth and nail to get the charges dismissed.

This hypothetical shows the amount of work and preparation that goes into properly defending a FINRA insider trading case. It’s not something to take lightly or attempt on your own as a broker. Having an experienced legal team like Spodek Law Group in your corner can make all the difference.

Why Spodek Law Group? Unmatched FINRA Defense Experience

When it comes to defending against FINRA insider trading investigations, you need a firm with nationwide experience and a track record of success. That‘s exactly what you get at Spodek Law Group.Our founding partner Todd Spodek is a second-generation trial attorney who has handled hundreds of high-stakes cases over his decades of practice. He and our team of veteran FINRA defense lawyers have represented brokers, investment advisors, public companies and others in insider trading matters across the country.We understand the severe implications of these allegations on your career and future. That‘s why we take an aggressive, detail-oriented approach from day one. We’ll explore every possible defense strategy and leverage our deep familiarity with FINRA’s processes and the latest case law.But our representation goes beyond just legal expertise. We prioritize open communication and treating each client like part of our family. You’ll always know exactly where your case stands and what‘s being done to protect you.It’s this white-glove level of service, combined with our nationwide capabilities and insider trading knowledge, that sets Spodek Law Group apart. When your career and freedom are on the line, you need the best defense possible. We deliver it without fail.

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