The vast majority of disciplinary proceedings involving financial services professionals are brought by FINRA and they begin by sending a request for information (most often for documents and written responses to questions, but sometimes for testimony via an “on the record” interview) pursuant to FINRA Rule 8210. There are a variety of circumstances which can give rise to an 8210 letter, relatively common examples include: receipt by FINRA of a customer complaint or an amended U4 reporting receipt of a customer complaint, or an arbitration or a regulatory action involving other government authorities (e.g., the SEC, State regulators or State attorneys general); filing of a U5 with a “yes” answer or reporting a termination other than “voluntary,” retirement or death; late filing of or failure to file a U4 making required disclosures (such as the existence of liens, judgments, bankruptcies, criminal charges or convictions among other things). Many registered persons are surprised to discover that they are equally responsible for filing an amended U4 to make a required disclosure, even if they have reported the matter to their firm. Of course, the firm also has responsibility and also risks a sanction if it fails to make required disclosures in a timely fashion.

More than one 8210 letter may be received by a firm or a registered individual following or during a periodic examination, but most commonly for individual advisors the 8210 letter is the first indication that FINRA is looking into a matter. While an 8210 letter will inform the advisor that FINRA is conducting an investigation and the general subject matter, often they give too little information to alert the advisor to the many possible pitfalls that may attend their predicament. Perhaps for this reason, too many advisors fail fully to perceive the seriousness of the situation or the risks that an incomplete or sloppy response entail. For example, responses that fail to respond to all aspects of a request, or which raise additional questions in the mind of the investigator, can lead to follow up requests that might open new areas of inquiry, or may raise more questions than answers and lead to an “on the record” interview, which is a misleading name for what in fact is the equivalent of deposition testimony under oath, subject to the penalties for perjury, and can be the prelude to a so-called “Wells letter” setting out the basis of the decision to file a formal charge.

We have advised in connection with scores of 8210 letters, on the record depositions and, in a minority of cases, Wells submissions and settlement negotiations. Also, we have many years of experience managing the proper approach to and content of 8210 responses so as to help minimize the aggravation and burden to the advisor, identify pitfalls and work to limit the risk of unnecessarily prolonging or complicating the situation with an expanded investigation which can result in extensive disciplinary proceedings. Financial advisors are entitled to be represented by counsel of their own choice in connection with responding to any 8210 letter or follow-up letters; you need not rely on in-house counsel and deserve to be represented by an attorney without potentially conflicting loyalties. Call or email to schedule an appointment for a free consultation: 212-344-5666.