Enforcement Defense

Investigations from financial industry enforcement demands responses that are precise. Every word is evidence.

With the increasing number of financial advisors stepping into the industry, the FINRA keeps a thorough check on any fraudulent activity that might harm the investor. Rules and regulations laid out by the authority continue to be amended to keep up with the changing times. Comprehending and implementing these regulations as firm policies is not an easy task. If expert help is not sought in the beginning or as the regulations change, the authorities will not waste a minute to slap your firm with a lawsuit. If this happens, your firm would require a FINRA enforcement defense that is potent enough to withstand the questions and scrutiny so that you can keep your business running without losing your reputation in the financial industry.

Everything you disclose or present as evidence can be used against you. Therefore, it is vital to have MAH Advising’s team of experts at your side whenever you get into trouble with FINRA. Our consultants have been through the FINRA training process and know their job well. They will leave no stone unturned to protect you and your firm against the investigation set by the licensing board and other pertinent bodies.

The letter you don’t want in your mailbox: The notorious 8210; Step 1

Step one of FINRA enforcement is dispatching the 8210 letters to the firm under investigation. This official document denotes the initiation of a formal inquiry against your firm and its undertakings. With the reception of this letter, FINRA will immediately start collecting every piece of evidence against the allegedly transgressing financial advisor, which will be used in court and other proceedings if FINRA deems further action necessary. If your firm has received rule 8210, you should immediately start forming a robust FINRA enforcement defense.

Enforcement investigation: Stage 2 of FINRA intervention

The second stage in the process is the enforcement investigation undertaken by the FINRA itself. A team of ruthless investigators is deployed to do further digging into your case and to look for any past instances of a similar nature. The response submitted by your firm can and will be used against you. The following bodies will be taken into the loop to build a case:

  • CFP board
  • State attorney general
  • Securities regulators
  • SEC enforcement defense

On The Record Interviews: The FINRA version of depositions

A face-to-face meeting is a setup between the FINRA delegates and your firm’s FINRA enforcement defense. It is similar to a deposition executed in other legal cases, whereby a video camera and typewriter are included in the meeting for a real-time record formation of the verbal discussion between parties involved. Every facial expression and spoken word is archived to be used during the formal hearings.

The accused will be ordered to converse under oath and to answer questions put forth by the FINRA counsel. This stage of the FINRA investigation is only reached when the authorities have sufficient evidence against your firm or when the legal counsel of the authority has a strong suspicion against you.

Acceptance, waiver, and consent (AWC): FINRA analogy of the plea bargain

This is the stage that your firm should not reach if you wish for it to survive in the financial industry. It is the end-game. Several outcomes can be expected from AWC. If your FINRA enforcement defense fails to build a strong case in your favor, you might face heavy fines, suspension of activity, or in the worst case, statutory disqualification. Firms that fail to satisfy the FINRA about the solid evidence collected against them can be disbarred from practicing ever again and will lose their standing as Financial Advisor permanently.

What to expect after an SD?

If the outcome of AWC is Statutory Disqualification, you must consider that MC-400 is now inevitable. However, the edge your FINRA enforcement defense has, in this case, is that it can negotiate with FINRA on the details of the disqualification and bag you a deal that is less damaging you.


Failure of FINRA enforcement defense to satisfy the opposing counsel would lead to no other option but to accept the disqualification. In this case, your role and proceedings as a Financial Adviser will be subject to the strictest form of regulatory supervision. Even the most nominal mistake can get you disqualified to practice.

Increased MC-400 Regulation

If your FINRA enforcement defense chooses to agree to the terms of the SD laid out by the opposing counsel, then you will most probably have to surrender to increased MC-400 scrutiny. Your broker-dealer will have to print out a formal document stating how you will satisfy the terms and conditions of the SD in the future. It is similar to having a parole officer observing every move you make to ensure complete compliance.

Shifting ball to the other court: The Wells Notice

If your FINRA enforcement defense advises you against signing the AWC, then the next dish to be served is the Wells Notice. The issuance of this formal document means that it is now on the enforcement to prove the allegations levelled against you. It includes details of the evidence gathered and a list of the rules that were violated due to your operation.

Having a strong FINRA enforcement defense at your aid is crucial during every stage of dealing with enforcement. Contact MAH Advising now to learn more about how we can help you in these testing times.

Disclaimer: We are consultants, not lawyers, this is not legal advice. We work with the top law firms when the practice of law is required.