The Financial Industry Regulatory Authority is reminding members of their obligation to comply with regulatory investigations.
In Regulatory Notice 25-11, published recently, FINRA emphasizes that members and associated persons, no matter where they are located, are required to provide information and testimony in response to a request from FINRA staff pursuant to FINRA Rule 8210.
The rule states, in part, that 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.
Rule 8210 applies to FINRA members regardless of where they, or their books and records, are located.
The authority notes that because FINRA lacks subpoena power, compliance with the rule is essential for the authority to fulfill its self-regulatory mission. Members could be expelled if they fail to respond, or do not respond truthfully or completely, to a request made pursuant to Rule 8210.
“A number of FINRA members have operations, personnel or copies of books and records located outside of the United States,” the notice states. “Some jurisdictions outside of the United States have laws that may potentially conflict with the requirements of Rule 8210 and prohibit persons from responding to information requests from overseas regulators. Rule 8210 does not, however, provide any exception to complying with its requirements based on foreign law.”
FINRA also reminded members that its Rule 3110 requires a system to supervise the activities of each associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations and applicable FINRA rules, including Rule 8210. As a result, members with operations, personnel or copies of books and records located outside the U.S. must ensure that their supervisory systems and procedures are reasonably designed to achieve compliance with Rule 8210.
The attorneys at Hyman Cotter PC have the experience to guide and advise you through any type of regulatory investigation. We were formally senior attorneys in the SEC’s Division of Enforcement who have represented clients in regulatory matters while working at Morgan Stanley and in private practice at some of the world’s largest law firms. If you are the subject of a regulatory proceeding, contact Hyman Cotter PC at 312-291-4600 or through our online contact form for a free consultation.
