If you are being investigated by FINRA it is important for you to contact an experienced and aggressive FINRA attorney immediately. Contact Law Offices of David Harrison immediately for a free consultation.
The first step in a FINRA Enforcement investigation is for FINRA to investigate and gather evidence on the stockbroker. FINRA attempts to build a case against the stockbroker by asking questions and requesting document from the stockbroker and the stockbroker’s brokerage firm. Under FINRA rules, failure to cooperate with FINRA may result in discipline against the stockbroker, including being barred from the securities industry. FINRA may order the stockbroker to an “on the record” session deposing him or her. It is crucial an attorney representing you is present to protect your rights at the “on the record” session. At the conclusion of the investigation, FINRA engages in a Sufficiency of Evidence review and determines whether the conduct merits a recommendation of formal disciplinary action. If the violation is minor, the matter may be resolved with an informal disciplinary action, such as an issuance of a Cautionary Action which is not reported on the Central Registration Depository system.
If FINRA proceeds with a recommendation of formal discipline it will notify the individual in what is called a Wells Call, which outlines the proposed charges and preliminary evidence supporting the charges. The Wells Call is followed by a Wells Notice, which is a reportable event, confirming that the Wells Call has been made. Most matters settle, and it is important to have an aggressive attorney representing the target individual to resolve the case in the best way possible. If the matter is not resolved the individual submits a Wells Submission presenting facts and legal arguments that no action should be instituted. Disciplinary action may be brought through a settlement or a formal complaint. If a complaint is issued, the case is heard before a panel chaired by a professional hearing officer and includes two industry representatives.
At the hearing, the parties present evidence for the Hearing Panel to evaluate in determining whether an individual has engaged in conduct violating FINRA rules, federal securities laws, or SEC regulations. The Hearing Panel also considers previous court, SEC, and FINRA’s National Adjudicatory Council (“NAC”) decisions to determine whether violations occurred. The Hearing Panel uses the FINRA Sanction Guidelines to determine sanctions and issues a written decision explaining the reasons for its ruling.
A firm or individual may appeal a Hearing Panel decision to the NAC, a body equally balanced between individuals in the securities business and non-industry representatives. Unless FINRA’s Board of Governors reviews the NAC’s decision, the NAC decision is FINRA’s final action in the matter. A firm or individual can appeal FINRA’s action to the SEC and then to a federal court.