Back in February, I wrote a piece on what to do when you get an SEC subpoena. SEC subpoenas are only part of the securities regulatory landscape. While the SEC can and will subpoena anyone – registered or unregistered – who is potentially the target of or may have helpful information related to an SEC investigation, FINRA registered representatives are additionally subject to FINRA inquiries via FINRA Rule 8210.
FINRA Rule 8210 allows FINRA investigators to essentially “subpoena” a person – i.e., require that they testify on the record and/or compel them to produce documents – without actually ever getting a subpoena. Instead, FINRA uses what is commonly (and not surprisingly) referred to as an “8210 Request.”
8210 Requests are similar to SEC subpoenas in their function, but differ slightly in practice. FINRA investigators will regularly tell parties that FINRA is not the government, but merely a private member organization. Why is that significant? Some may say that it’s significant because FINRA cannot actually “require” someone to come testify under a threat of contempt or jailtime; that your response is, in a way, “voluntary.”
However, this is not entirely accurate. Failing to respond to a FINRA 8210 request means that you lose your license – and for full-time registered reps, your livelihood. That’s not very “voluntary.” Additionally, because it is not technically a government actor, FINRA investigators regularly remind parties that there is no 5th Amendment privilege against self-incrimination – even though in some cases, the conduct under investigation may be criminal and the testimony being given is under oath. So, “pleading the fifth” while retaining your license is likely not going to be an option.
Now that we know what an 8210 Request is and how it works, what do you do if you get one?
As I’ve said before, receiving a subpoena (or 8210 Request) from any government agency – or in this case, quasi-governmental “member organization” – can be a worrisome event in anyone’s life, but for a financial professional, receiving one can be especially intimidating.
When you receive an 8210 Request, the first thing you should do is make sure that your interests are represented and protected. The best way to do that is to contact a securities industry law firm that understands these matters.
You should also notify your compliance officer, who will likely have already received a copy from FINRA, but it is important to make sure. At that point, you will start the process of complying with the 8210 Request – including gathering documents and preparing for your “on the record” interview (or “OTR” for short). OTRs before FINRA and the SEC are very similar and involve sitting in a conference room with investigators and answering their questions under oath. In both instances, your attorney may be present. Update: In this age of the COVID-19 pandemic, FINRA and SEC subpoenas and 8210 requests have not in any way decreased. Both agencies can, and do, require testimony to be provided by remote video technology (e.g., Zoom and WebEx platforms).
Before you get to that point, it is important to sit down with your attorney and try to determine who your interests are aligned with and who may be adverse to you. Your broker-dealer and its lawyers are always going to be looking out for your broker-dealer’s best interests. It is important to remember that may or may not include looking out for your best interests. Too often, registered reps assume that their firm is looking out for them. Only after they have been barred or suspended by FINRA do they realize that they were their firm’s scapegoat.
As with the SEC, the magnitude of the potential penalties you may be facing from FINRA can include substantial fines, as well as losing your license and your livelihood. So, from the moment you receive an 8210 Request, your focus needs to be on protecting yourself, your savings, your reputation, and your license(s).
Consulting with an experienced attorney could be the best move that you make when faced with such a potentially life-changing event. The New York attorneys at Malecki Law have experience representing individuals in regulatory actions before FINRA as well as the SEC, and we can help you whether you live in New York or elsewhere in the United States. Contact us for a free consultation. Various hourly-billing and flat-fee based options are available to help you make smart decisions from inception to the completion of your matter.
As legal advice must be tailored to the specific circumstances of each case, nothing provided herein should be construed as legal advice and/or used as a substitute for advice of competent counsel.