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), and 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

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January 11, 2022

“Reasonable” Does Not Mean Perfect: Recent FINRA Regulatory Developments and Interpretive Questions

November 4, 2021

Payment for Order Flow (PFOF): Your Questions Answered

October 11, 2021

This podcast details why payment for order flow and gamification are in the news, and how regulators and the industry in general are addressing related issues and concerns. The episode features Brattle Senior Consultant and Broker-Dealers & Financial Services Practice Leader Hollie Mason, MS, JD, who is joined by Carlton Fields Shareholder and former FINRA Senior Director Justin Chretien.