FINRA Investigations

Examiner staff are located in 15 District Offices and in the Executive Office in Washington, DC. Their primary responsibilities include monitoring the activities of FINRA members and their associated persons for compliance with FINRA, federal, MSRB, and other SRO rules and regulations.

 

When FINRA staff investigate allegations of wrongdoing (routine examinations of member firms, reports of an associated person's termination from a member firm, customer complaints, and/or any other indications of rule violations) they normally and routinely contact the member firm, registered representative, customers, and other involved parties to obtain information about the events being investigated. Should you be contacted by FINRA staff as the result of an examination or investigation, you must cooperate fully and answer all written and oral inquiries clearly and truthfully. This requirement continues for up to two years after you leave the securities industry, during which time FINRA retains regulatory and enforcement jurisdiction over you. However, the running of the two-year period can begin anew in the event an amendment is filed within two years of your original notice of termination, disclosing certain reportable misconduct. Your firm should be apprised of any FINRA investigation in which you may be involved. You will, in most cases, have to update and amend your Form U-4 with your firm as a result of a FINRA investigation or customer complaint, among other factors.

 

At the conclusion of a FINRA staff investigation, a report is prepared, and apparent violations of rules and regulations are considered for possible disciplinary action. If a formal disciplinary action is initiated, the firm and individuals named as respondents will receive a written statement of all charges and will be entitled to a hearing before a three-person panel consisting of two industry peers and chaired by a Hearing Officer who is an attorney employed by FINRA. Respondents have the right to be represented by counsel and to present witnesses and evidence in their defense. If violations are deemed to have been committed, penalties may include substantial monetary fines; suspension of an individual's registration for days, weeks, months, or years; or even a permanent bar from holding any job in the industry.

 

The media and the membership are also notified if a fine greater than $10,000 or a suspension or bar is imposed. The Board of Governors has published and made available to all member firms a listing of sanction guidelines that sets forth the typical sanctions that may be expected for various rule violations. You are strongly encouraged to obtain the sanction guidelines from your employer and become familiar with these as a means of better understanding the importance of maintaining compliance with FINRA rules and regulations.

 

FINRA informs state or federal authorities if it uncovers suspected egregious violations by member firms and their associated persons. Federal and state regulatory authorities likewise have the power to discipline firms and registered representatives and may bring civil or criminal proceedings for violations of their laws and rules.