How to Respond to FINRA 8210 Request
Financial advisors and registered brokers who receive a FINRA 8210 request form should hire a FINRA defense attorney and then take the necessary steps to comply with the document requests laid out in the letter. The costs of ignoring the letter or not complying with its demands are steep, and can even lead to a permanent ban from the industry. However, fulfilling the document requests and providing records relating to the letter without legal representation can be extremely difficult to do within the allotted timeframe, and can put registered securities professionals into legal hot water.
The FINRA defense attorneys at the national law firm Spodek Law Group have extensive experience helping financial advisors and brokers navigate the FINRA 8210 request process. With their legal guidance, you can comply with the request and reduce the risk that it leads to an adverse finding.
FINRA 8210 Request Letters are Often the First Step of an Investigation
Financial advisors and brokers who are registered with FINRA, the Financial Industry Regulatory Authority, have certain obligations to comply with FINRA rules and regulations. One of them is to comply with FINRA 8210 requests, which ask for certain records or documents that FINRA has reason to believe will be helpful in its investigation of a matter. By complying with the request and giving FINRA the documents that it is seeking to obtain, financial professionals fulfill their FINRA obligations and let FINRA determine whether to proceed with its investigation into the alleged securities violation.
Failing to comply with FINRA’s request, on the other hand, does not stop the investigation. It merely adds another level of regulatory scrutiny, as FINRA can then sanction the financial professional for failing to comply with its request under FINRA Rule 8210. FINRA can suspend or even permanently ban financial advisors or brokers from the entire securities industry on the basis of failing to comply with its requests.
FINRA 8210 Request Triggers
It is often difficult to tell why certain financial professionals or their firms are targeted with FINRA 8210 requests – FINRA does not disclose its investigative theories. However, there are some common situations that seem to be likely to trigger them, including:
- Customer complaints
- FINRA’s routine examinations of brokerage firms
- FINRA’s routine investigations into the financial professionals or firms
- Other red flags that FINRA finds suspicious
Regardless of the particular trigger, there are generally two stages that FINRA goes through when investigating a financial professional or brokerage firm: The request for records and the On-the-Record, or OTR, interview.
Typically, FINRA sends a request for records first, seeking data from the financial professional or firm to supplement the information that it already has about the matter that it is investigating. Financial professionals may only draw FINRA’s attention or pique its suspicion in the OTR interview or deposition after the 8210 request has been fulfilled.
How to Respond to a FINRA 8210 Request
Financial advisors and brokers who receive a FINRA 8210 request should take the letter very seriously and should strongly consider talking to a lawyer about their situation. Not only can failing to comply with the request hamper FINRA’s investigation, it can also lead to being barred from the securities industry. Additionally, properly complying with the request is not necessarily a simple task. It can be time-consuming, particularly if FINRA’s request is a wide-reaching one or if the documents being collected are in the possession of third parties, like your bank. It can also be difficult to decide whether FINRA’s request is even valid.
The more steps that you take to respond to a FINRA 8210 request, the more clear it becomes that you need a FINRA defense lawyer.
1. Determine Whether the FINRA 8210 Request is Valid
FINRA can only issue a request to financial professionals and firms that fall under its jurisdiction. This is generally limited to financial professionals or firms that are registered with FINRA.
If you are not or are no longer registered with FINRA, it can come as a surprise to get a FINRA 8210 request in the mail. At that point, you should not even be under FINRA’s jurisdiction.
However, resigning your FINRA registration will not immediately strip FINRA of its authority to issue a 8210 request. According to FINRA Rule 1122, financial professionals and firms have to provide written notice of their resignation to FINRA. Even then, FINRA retains its jurisdiction for a period of time. If the conduct that FINRA is investigating or examining for a regulatory proceeding happened before the financial professional or firm left FINRA’s jurisdiction, then FINRA’s jurisdiction still exists for two years after the effective date of the resignation, as per FINRA Rule 8312. Additionally, if FINRA believes that the resignation was an attempt to avoid an imminent investigation or proceeding, then FINRA’s jurisdiction will still exist.
If you think that the FINRA 8210 request is invalid because you are no longer registered, it is essential to hire a FINRA defense lawyer to determine if the request is enforceable or not. If it is, and you do not comply, it could lead to sanctions by FINRA that could keep you out of the securities industry for a very long time.
2. Hire a FINRA Defense Lawyer
Once you have determined that the FINRA 8210 request is valid and enforceable, it is very important to hire a FINRA defense lawyer to help you comply with its demands. Not only does FINRA have the authority to ban you from the securities industry for failing to comply with its 8210 request, but it can also do so for not fully complying with it. A FINRA defense lawyer can ensure that you have done everything that is necessary to satisfy the 8210 request, while also preventing you from oversharing and providing FINRA with information that it did not ask for. You want to comply with the 8210 request, but you do not want to give FINRA additional leads that can lead to new investigations.
3. Identify the Relevant Documents
Your FINRA defense attorney can also help you identify the relevant documents that FINRA has requested in its 8210 request. This can be a complicated issue, though. Depending on the scope of the request, finding the relevant documents can be tricky if it is unclear which ones FINRA wants to see.
4. Collect the Documents
Even after you have identified the relevant documents in your possession, you may still have to collect them from other sources. Many of the documents that FINRA requests in its 8210 letters are financial statements or other types of records that are held by third parties, like banks or brokerage firms. Gathering these documents from those third parties can take time.
5. Disclose the Documents to FINRA
Once all of the relevant documents have been collected, you have to provide FINRA with them. Your FINRA defense lawyer can ensure that FINRA receives them within the allotted time frame.
Frequently Asked Questions About FINRA and the 8210 Request Process
What is FINRA?
FINRA is the Financial Industry Regulatory Authority. It is a not-for-profit corporation that oversees the securities industry in the United States. In essence, it acts as a watchdog over securities firms and professionals by administering tests and licensing securities professionals, the Series 3 exam, and regulating registered members’ conduct with its rules and regulations. FINRA also investigates allegations of wrongdoing by its members and is empowered to sanction them for a wide variety of misconduct.
How Long Do I Have to Respond to a FINRA 8210 Request?
Most legal notices or letters give their recipients a specific deadline. This is not the case for FINRA 8210 requests. Instead, FINRA Rule 8210 says that members or former members have to provide the requested information “within such time period as FINRA may require.”
This generally means that you have 30 days from when you received the request to comply with it. You can request an extension if you think that you will need more time to gather the documents or information that FINRA wants from you. However, FINRA will only grant that extension if you show “good cause” for the additional time.
While 30 days may sound like a lot of time, remember that you will have to identify the relevant documents, gather them from their various sources, and then provide them to FINRA. While 30 days may be enough time to do all of this, the sooner you can get the process started, the better.
Are FINRA 8210 Requests Given Under Oath?
Yes, all FINRA 8210 requests are made under oath. This means that it is a civil crime to lie in your response to FINRA. However, mistakes are not lies: If you honestly believe that your response is truthful, you cannot be convicted for perjury.
What Can Happen if I Don’t Comply With the 8210 Request?
FINRA can suspend or bar you from the securities industry if you do not comply with its 8210 request. However, you do have the right to a hearing before you can be sanctioned. The hearing will be held within 60 days of the failure to comply with the 8210 request. At the hearing, FINRA has to show that you did not comply with their request. You will then have the opportunity to be heard and to present your evidence that you should be allowed to continue working in the securities industry.
