FINRA Rule 8210 (Provision of Information and Testimony and Inspection and Copying of Books) is the starting point of virtually every FINRA Wells Notice and enforcement proceeding, as it gives FINRA the authority to request documents and testimony from firms, registered persons and, in FINRA’s view, other persons and entities related to a registered person or entity.
The relevant portion of Rule 8210 is as follows:
For the purpose of an investigation, complaint, examination, or proceeding authorized by the FINRA By-Laws or rules, an Adjudicator or FINRA staff shall have the right to:
(1) require a member, person associated with a member, or any other person subject to FINRA’s jurisdiction to provide information orally, in writing, or electronically (if the requested information is, or is required to be, maintained in electronic form) 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 the investigation, complaint, examination, or proceeding; and
(2) inspect and copy the books, records, and accounts of such member or person with respect to any matter involved in the investigation, complaint, examination, or proceeding that is in such member’s or person’s possession, custody or control.
FINRA’s authority to demand documents and information is broad, and in 2013 the SEC approved amendments to Rule 8210 to increase that authority. That amendment specified, among other things, that FINRA staff and adjudicators may inspect and copy information in the possession, custody or control of a member firm, associated person or person over whom FINRA has jurisdiction. The amended rule also allows FINRA to serve a Rule 8210 request on an attorney for a member firm, associated person or person subject to FINRA’s jurisdiction. The amendments became effective February 25, 2013. See Regulatory Notice 13-06.
Rule 8210 is a powerful investigative tool for FINRA, which can be the precursor to significant fines and sanctions. If there was any doubt about the requirement to comply, the Rule 8210 makes the point clearly:
(c) Requirement to Comply
No member or person shall fail to provide information or testimony or to permit an inspection and copying of books, records, or accounts pursuant to this Rule.
A failure to comply often results in an immediate enforcement proceeding and a permanent bar from the industry. However, with experienced counsel, Rule 8210 requests are often negotiable, and can be modified if a well-reasoned objection is raised to the Staff member who sent the request. We have had significant success in negotiating these requests.
Knowing how to respond, when to object, and when to cooperate is key to a successful outcome.
For a further discussion of compliance with the Rule and tips for doing so, see Tips for Responding to an SEC Subpoena. There are differences in an 8210 request and an SEC subpoena, but the underlying concepts are the same.
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Mark J. Astarita, Esq. represents investors, financial professionals and firms in litigation, arbitration and regulatory matters across the country. He is a partner in the national securities law firm of Sallah Astarita & Cox, LLC and can be reached by email at firstname.lastname@example.org or by phone at 212-509-6544.
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