Information and Testimony Requests
FINRA Rule 8210 (Provision of Information and Testimony and Inspection and Copying of Books) grants FINRA staff and adjudicators authority to inspect and copy the books, records and accounts of member firms, associated persons and other persons over whom FINRA has jurisdiction relating to investigations, complaints, examinations or proceedings. These records include documents relating to compliance with just and equitable principles of trade, other FINRA rules, SEC rules, MSRB rules and the federal securities laws.1 Rule 8210 serves as FINRA's primary tool to obtain information necessary to conduct investigations,2 including investigations concerning a member firm's and associated person's obligation to observe high standards of commercial honor and just and equitable principles of trade.3
The SEC approved amendments to Rule 8210 to, among other things, specify that FINRA staff and adjudicators may inspect and copy information in the possession, custody or control of a member firm, associated person or person over whom FINRA has jurisdiction.4 The amended rule also allows FINRA to serve a Rule 8210 request on an attorney for a member firm, associated person or person subject to FINRA's jurisdiction. The amendments became effective February 25, 2013. See Regulatory Notice 13-06.
1 See Supplementary Material .01 to Rule 8210.
2 See, e.g., Howard Brett Berger, Exchange Act Release No. 58950, 2008 SEC LEXIS 3141, at *13 (Nov. 14, 2008) (stating that Rule 8210 "provides a means, in the absence of subpoena power, for [the association] to obtain from its members information necessary to conduct investigations") (internal quotation omitted), petition for review denied, 347 F. App'x 692 (2d Cir. 2009) (unpublished). The SEC has stated that Rule 8210 is at the "heart of the self-regulatory system for the securities industry" and is an "essential cornerstone of [FINRA's] ability to police the securities markets and should be rigorously enforced." Id.; Paz Secs., Inc., Exchange Act Release No. 57656, 2008 SEC LEXIS 820, at *14 n.16 (Apr. 11, 2008) (internal citation omitted), aff'd, 566 F.3d 1172 (D.C. Cir. 2009).
3 See FINRA Rule 2010 (requiring a member, in the conduct of its business, to observe high standards of commercial honor and just and equitable principles of trade). FINRA Rule 2010 is an ethical rule and "is broad enough to encompass business-related conduct that is inconsistent with just and equitable principles of trade, even if that activity does not involve a security." Vail v. SEC, 101 F.3d 37, 39 (5th Cir. 1996) (per curiam). Rule 2010 "applies when the misconduct reflects on the associated person's ability to comply with the regulatory requirements of the securities business and to . . . handl[e] other people's money." Daniel D. Manoff, 55 S.E.C. 1155, 1162 (2002).
4 See Order Approving Proposed Rule Change Relating to FINRA Rule 8210, 77 Fed. Reg. 74253 (Dec. 13, 2012); FINRA Regulatory Notice 13-06 (Jan. 2013).
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1. When are books, records and accounts under the “control” of a member firm, associated person or person subject to FINRA’s jurisdiction?
For purposes of Rule 8210, whether a particular document is within a member firm’s or person’s “control” is determined by the facts and circumstances of each situation. Generally, a document will be considered to be in the control of a member firm or person if the firm or person has the legal right, authority or ability to obtain the document upon demand.1