At some point in their careers, many financial professionals will find themselves in the receiving end of a subpoena from Securities and Exchange Commission, “SEC” or a Financial Industry National Regulatory Authority “FINRA” 8210 Request. The receipt of such documents signifies the regulatory or self-regulatory agencies’ request for information and/or documents in relation to an investigation of a potential securities laws violation. While the Securities and Exchange Commission will formally issue a subpoena, FINRA sends parties the equivalent inquiry letter, often referred to as an “8210 Request”. Both entities can request the receipt of a wide range of information and a high number of documents within a short amount of time. Furthermore, recipients who do choose not to respond to these critical requests honestly could ruin their careers and lives. While the SEC subpoena and FINRA 8210 request may share some similarities, there are many differences based on the powers allotted to the respective regulatory agencies.
The Securities and Exchange Commission is a federal government regulatory agency entrusted to develop national regulations and enforce federal laws. Upon reasonable suspicion of securities laws violations, the SEC can issue a subpoena to anyone. Meanwhile, FINRA is not an official government entity, but rather the security industry’s self-regulated membership organization. FINRA has the authority to request documents, information, and testimony from those under its’ jurisdiction in a FINRA 8210 letter. Both the SEC and FINRA run a similar on-the-record “OTR” interview, with the option of an attorney present in the event of a testimony request. However, the SEC offers more response flexibility, protections under the Fifth Amendment and investigation information access in comparison with FINRA.
In the face of a potential securities law violation, the SEC will often send subpoenas to the targets as well as any potential witnesses with information. A SEC subpoena can demand documents (duces tecum) or oral testimony (ad testifcandum) without including context. The SEC can start an investigation by presenting their suspicions in a formal order of investigation. Chiefly, a former SEC Enforcement attorney, John Reed Stalk alleges that there is a “low standard” of cause needed for approved subpoena issuance. The formal order of investigation mainly contains information regarding the scope and possible subjects of the investigation. Subpoenaed parties and their attorneys can request the order.