Responding to FINRA Rule 8210 Information Request
If you are a financial advisor and have received an official-looking letter from FINRA requesting information in relation to an investigation it is conducting, this might be cause for concern for you. What should you do?
What is a FINRA Rule 8210 Information Request?
Rule 8210 allows the Financial Industry Regulatory Authority (FINRA) to demand documents, information or testimony from broker-dealers or employees. Rule 8210 enables FINRA staff to inspect and copy virtually all of the books and records of member firms, associated persons and any other person over whom FINRA has jurisdiction.
FINRA’s authority extends to all electronically stored data including email, text messages, IMs, etc. FINRA is then permitted to share your documents with domestic federal agencies or foreign securities regulators.
The regulator uses Rule 8210 as its authority when seeking sworn testimony or documents during an investigation.
Are their Limits to the Rule 8210?
Theoretically, FINRA’s requests must be in connection with an investigation, complaint, examination or proceeding. However, FINRA’s staff has great latitute to decide what does or does not involve an investigation, complaint, examination or proceeding.
When sending a Rule 8210 request, FINRA is supposed to limit the request to information relating to the operation of the broker-dealer or the person’s association with the member. FINRA may decide that documents concerning outside business activities or private securities transactions are relevant to its investigation.
Also, if FINRA believes that an individual violated the “just and equitable principles” rule (Rule 2010), that could open the door to requests of any possible kind.
What is involved in a Rule 8210 Request?
Typically, the request for information is sent after FINRA gets a tip, referral, complaint, examination or termination of registration (Form U-5).
Similar to a subpoena, the information request may require the production of documents or require written responses to requests for information. Individuals may be required to appear for testimony in an “on-the-record interview” (OTR) at a date and location set by FINRA’s staff. FINRA may also request a written statement.
What should I do after I receive a FINRA Rule 8210 request?
The first step would be to discuss the request with your chief compliance officer in your member firm. Most likely, they will have also received the request, but it is important to continue to follow procedures within your organization and you may need their help with documents and records.
You may need to provide financial records, trading records, opening account documents, emails, and other documentation and your firm can help you access any documents you may not have.
The second step is often to contact FINRA and established a chain of communication and ask for an extension of time if needed, since the time for responding is often short.
Hiring an Experienced FINRA Attorney
The next step is hiring an experienced attorney who is familiar with FINRA disciplinary matters. An 8210 Request is a serious matter, and you should not be using a general litigator or other attorney who does not focus their practice on FINRA work.
It will be important for you to have an attorney who understands the securities industry and deals with FINRA staff on a regular basis. Choose the wrong attorney and you may end up answering FINRA’s questions in a way that may inadvertently cause you harm.
Gathering the Information for FINRA
Since FINRA now requires that you provide any documents that you have in “possession, custody or control,” that means that if you can possibly acquire it, you must share it with FINRA. Don’t forget that FINRA may obtain some documents from third parties, so it wouldn’t be a good idea to try to hide something that you think may not put you in the best light.
It will be important to preserve your documents to ensure that nothing is destroyed during the investigation and that you have copies of everything that you plan to send to FINRA.
Your written response may be the most important part of the process, and that is where an experienced FINRA lawyer can come into play. This is an opportunity for you and your attorney to put yourself in the best light and present your side of the story – hopefully persuading FINRA that their investigation is unnecessary by explaining away the allegations.
Once you have submitted the information to FINRA, it may take months to receive a response. FINRA may come back asking for more information or request an on- the- record interview.
Free Consultation with a Securities Attorney
Getting a request for information from FINRA can be daunting, but you can handle it with proper representation. The worst response from you is no response — The consequences for failing to respond to an 8210 Request are severe and final. FINRA routinely issues permanent bars from the securities industry to people who refuse to respond.
The foregoing information is a brief overview of the FINRA Rule 8210 Request for information and is being provided for general information purposes only. If you are a financial advisor and have received a request for information from FINRA and need legal advice, The White Law Group may be able to help you. Please call the offices at 888-637-5510 for a free consultation with one of our experienced securities attorneys.
The White Law Group is a national securities arbitration, securities employment and securities regulatory law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on the firm, visit https://www.whitesecuritieslaw.com.
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