FINRA Enforcement, Arbitration, and Appeals
Overview
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. The Securities and Exchange Commission (SEC) oversees FINRA.
Our Practice
Carlton Fields attorneys handle FINRA regulatory investigations and enforcement matters across the country. We also handle FINRA arbitrations of industry and customer disputes and appeals of FINRA matters. Our clients include broker-dealers, registered representatives (individuals licensed to sell securities), and associated persons (APs) (anyone engaged in the securities business who is directly or indirectly controlled by a FINRA member, and management personnel).
We handle all stages of FINRA proceedings, from responding to informal and formal requests for information, representing clients during on-the-record testimony, representing clients through the Wells process, hearing preparation, FINRA enforcement hearings, and appeals of National Adjudicatory Council decisions to the SEC. We also advise broker-dealers and associated persons on Form U4/U5 matters, including BrokerCheck disputes.
Our team of lawyers includes more than three dozen attorneys, including a former FINRA senior director and senior litigation counsel from FINRA’s litigation group, and several former high-level SEC attorneys from the SEC’s divisions of enforcement, corporation finance, investment management, trading and markets, and the trial unit.
Our team works closely with Carlton Fields’ FINRA and SEC regulatory attorneys who advise broker-dealers and APs on various FINRA regulatory and compliance issues. When the need arises, our team works seamlessly with Carlton Fields’ SEC Enforcement Practice and other practice areas to handle related matters.
Experience
FINRA Enforcement
- Represented broker-dealers in FINRA matters alleging violations of FINRA’s suitability rules and Regulation Best Interest involving alternative investments.
- Represented broker-dealers in FINRA matters alleging violations of federal securities laws and/or FINRA rules including supervision of registered representatives, fraud/theft detection and prevention, market timing, firm recordkeeping, untimely responses to Rule 8210 requests, and undisclosed outside securities accounts.
- Represented broker-dealer in FINRA matter alleging negligent fraud in a public offering.
- Represented broker-dealers in FINRA matters alleging various supervisory and books-and-records violations.
- Represented broker-dealers and APs in FINRA matters alleging various other alleged violations of FINRA rules, and advised on Forms U4 and U5 issues.
- Represented broker-dealer in FINRA matter involving supervisory procedures, sales practices, and operational issues.
FINRA Arbitrations
- Represented 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.
- Represented broker-dealer against an 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 wholesaler of variable insurance products in FINRA arbitration brought by high net worth individual.
- 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 AP in seven-day industry FINRA arbitration in an employment and breach of contract dispute.
FINRA Appeals
- Represented AP in appeal of disciplinary action taken by FINRA to SEC where hearing panel found AP engaged in cheating on a qualification examination and imposed permanent bar.
- Represented AP in appeal of disciplinary action taken by FINRA to SEC where hearing panel found AP engaged in private securities transactions for a hedge fund and imposed an 18-month suspension.
- Represented broker-dealer in appeal of adverse FINRA award to federal district court.
- 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.
Other FINRA Matters
- 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 broker-dealer in internal investigation of registered representative who did not obtain approval of outside business activities, including being named as beneficiary of client account, as required by firm procedures.
- Prosecuted adversary proceeding on behalf of FINRA trustee to recover fraudulent transfers by former head of defunct clearing broker.
- 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.
