Financial Regulation and Compliance: How to Manage Competing and Overlapping Regulatory Oversight, + Website

CHAPTER 8 How to Defend FINRA Enforcement Actions

When a firm becomes a FINRA member, it agrees to abide by the rules and regulations of the securities industry, and agrees to be subject to FINRA's jurisdiction. Under FINRA Rules, firms and associated persons are obligated to cooperate with FINRA staff when it conducts investigations. FINRA Rule 8210 requires FINRA's members, persons associated with its members, and any other person subject to FINRA's jurisdiction to provide information orally, in writing, or electronically as requested by FINRA and to testify at a location specified by FINRA staff, under oath or affirmation administered by a court reporter or a notary public if requested, with respect to any matter involved in a FINRA investigation, complaint, examination or proceeding.¹ Rule 8210 also allows FINRA staff to inspect and copy the books, records, and accounts of FINRA members.

FINRA's disciplinary actions involving its members and associated persons charged with violations of FINRA Rules and the federal securities laws are resolved by disciplinary hearing proceedings.² The disciplinary process begins with the filing of a complaint with FINRA's Office of Hearing Officers.

Separate from the disciplinary process, aggrieved investors may bring claims against FINRA members through FINRA's arbitration process. If an investor prevails in an arbitration against a FINRA member, the firm will be forced to pay the investor damages. Nearly all claims by investors against ...