Menu

FINRA Litigation, Enforcement and Investigations


Overview

Background

The Financial Industry Regulatory Authority, Inc. (FINRA) is a private corporation that acts as a self-regulatory organization (SRO) for the securities industry in the United States. FINRA, formerly the National Association of Securities Dealers (NASD), creates and enforces rules for its members based on the federal securities laws.

Our Practice

Carlton Fields attorneys handle FINRA matters across the country, focusing on industry disputes, customer disputes, and regulatory investigations and enforcement. Our clients include registered representatives (individuals licensed to sell securities), associated persons (anyone engaged in the investment banking or securities business who is directly or indirectly controlled by a FINRA member, whether registered or exempt from FINRA registration), management personnel.

We advise registered representatives and companies on FINRA conduct rules, including broker check disputes and Form U4/U5 issues; defend companies and individuals in FINRA regulatory investigations and enforcement proceedings; represent companies and individuals in industry and customer disputes in the FINRA forum; and litigate cases arising under federal and state securities laws.

We also represent our brokerage firm clients in employment arbitrations before FINRA.  

 

Experience

  • Represented FINRA member firms and associated persons in FINRA regulatory investigations (informal inquiries and formal investigations) involving violations of FINRA conduct rules, and advised on Forms U4 and U5 issues
  • Advised and represented broker-dealer firms on FINRA regulatory investigations and inquiries involving supervisory procedures, sales practices, and operational issues
  • Assisted broker-dealer firms to resolve FINRA inquiries involving alleged violations of federal securities laws and/or broker-dealer regulations including supervision of registered representatives, fraud/theft detection and prevention, market timing, and firm recordkeeping
  • Represented registered broker-dealer firms and management personnel in NASD/FINRA customer and industry/broker arbitrations, including (i) an industry/broker dispute that went to an approximately two-month evidentiary hearing and (ii) a high-net-worth customer arbitration that went to an eight-day evidentiary hearing in 2014, resulting in the dismissal of all claims following the conclusion of the claimant’s case-in-chief
  • Successfully defended broker-dealer against AP’s claim of disability and national origin discrimination and retaliation
  • Represented broker-dealers and APs in three NASD arbitrations involving misrepresentation, selling away, state and federal securities law claims, and/or suitability claims
  • Represented life insurer in NASD arbitration; successfully argued pre-hearing for dismissal of the client on jurisdictional grounds
  • Represented broker-dealer and APs in wrongful termination FINRA arbitration where claimant also alleged defamation
  • Represented broker-dealer in appeal of adverse FINRA award to federal district court
  • Represented wholesaler of variable products in FINRA arbitration brought by high-net-worth individual
  • Represented broker-dealer in class action brought in federal court alleging that the defendant had a conflict of interest in sponsoring analyst reports covering companies with which the broker-dealer had other business relationships (state claims dismissed under SLUSA)
  • Represented financial services client in connection with threatened state securities law charges relating to alleged failure of affiliates to obtain state licensing as broker-dealers or investment advisers
  • Represented broker-dealer in NASD/FINRA arbitration involving sale of funding vehicles for 412(i) defined benefit retirement plan and advice to broker-dealer on response to subsequent regulatory investigation
  • Represented broker-dealer in NASD/FINRA arbitration alleging fraud and unsuitability in connection with sales of purported "high risk" investments subject to market losses
  • Represented broker-dealer in parallel SEC/NASD/state securities department investigation and related civil litigation involving alleged theft of client funds by former registered representative
  • Represented corporate clients in 1934 Act and FINRA filings, including regulatory approvals for transfers of ownership and company filings 
  • Prosecuted adversary proceeding on behalf of FINRA trustee to recover fraudulent transfers by former head of defunct clearing broker

All Insights

Two New FINRA Rules for the Protection of Senior Investors

Two New FINRA Rules for the Protection of Senior Investors

July 10, 2018

The protection of senior investors continues to be a priority for FINRA, from both an examination and enforcement perspective. In fact, FINRA detailed how seniors are one of its major areas of concern in the last three editions of its Annual Regulatory and Examination Priorities Letter.

FINRA Requires Order Taker Registration

FINRA Requires Order Taker Registration

March 31, 2018

In late 2017, FINRA pronounced in Regulatory Notice 17-30 that, "Beginning on October 1, 2018, unregistered persons cannot accept an order from a customer under any circumstances.

Delicate FINRA Balancing Act: To Self-Report or Not?

Delicate FINRA Balancing Act: To Self-Report or Not?

December 29, 2017

FINRA Rule 4530(a) requires member firms to promptly report certain enumerated events. Rule 4530(b) is less specific, with supplemental guidance advising that a firm should report when it concludes or reasonably should have concluded that conduct or events will result in "widespread or potential widespread impact to the member,

Nevada Securities Act Amendments – What’s Next?

Nevada Securities Act Amendments – What’s Next?

September 26, 2017

Over the summer, much was written about amendments to the Nevada Securities Act provisions governing financial planners, which became effective July 1, after being signed by the Governor on June 2.

Chief Compliance Officers Beware

Chief Compliance Officers Beware

June 23, 2017

In recent years, financial regulators have increasingly taken enforcement action against chief compliance officers (CCOs) and others in compliance oversight roles, rather than just against their employers.

FINRA Issues New Guidance on Social Media and Digital Communications

FINRA Issues New Guidance on Social Media and Digital Communications

June 23, 2017

In April, FINRA issued Regulatory Notice 17-18, which reiterates previous rules and provides additional guidance regarding the application of several key rules governing communications with the public to digital communications

FINRA Moves to Protect Seniors and Other Vulnerable Persons

FINRA Moves to Protect Seniors and Other Vulnerable Persons

June 23, 2017

FINRA has taken another step to protect against what it calls "financial exploitation of vulnerable individuals or individuals with diminished capacity."

FINRA Proposes to Loosen Restrictions on Performance Projections

FINRA Proposes to Loosen Restrictions on Performance Projections

June 23, 2017

The proposed exception would permit broker-dealer firms to provide clients with customized hypothetical investment planning illustrations that include the projected performance of an "asset allocation or other investment strategy."

FINRA Public Offering Proposal Excludes All Insurance Contracts

FINRA Public Offering Proposal Excludes All Insurance Contracts

June 23, 2017

For the first time since 2004, FINRA has proposed major amendments to its requirements that govern the terms of the underwriting arrangements for most public offerings of securities and mandate that such arrangements be submitted to FINRA for review.

FINRA Fines Firms for WORM Problems

FINRA Fines Firms for WORM Problems

April 10, 2017

Broker-dealers, including principal underwriters of insurance products, may retain required records in electronic format, subject to satisfaction of longstanding conditions.

SEC Approves FINRA Efforts to Protect Seniors and Other Vulnerable Persons

SEC Approves FINRA Efforts to Protect Seniors and Other Vulnerable Persons

April 10, 2017

The SEC recently approved an amendment to FINRA Rule 4512 that requires FINRA members to make reasonable efforts to obtain, from each customer for whom they maintain an account, specified information about a “trusted contact person.”

Cybersecurity Still Top FINRA Operational Risk

Cybersecurity Still Top FINRA Operational Risk

January 12, 2017

While FINRA acknowledges that there is no one-size-fits-all approach to cybersecurity, its 2017 letter reinforces its commitment to advising an approach grounded in risk management and effective control mechanisms for maintaining firms’ security and integrity.

Featured Insights

Disclaimer

The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.