An Acceptance, Waiver, and Consent (AWC) is FINRA’s version of a settlement or plea agreement following an investigation into an alleged rule violation. States often refer to the agreements as “consent orders.” FINRA uses them as a way to avoid the need for a formal hearing and the costly expense of lengthy litigation. FINRA sends AWCs to firms or advisors who have allegedly violated securities rules or regulations. By design, the advisor is always at a disadvantage, because FINRA’s investigations are held as “confidential,” meaning that case documents are never shared with the advisor.
Because AWCs are reportable and can be read in detail by the general public, it’s imperative to position yourself to influence the language that will be published in association with your name.
FINRA disciplinary measures create a discrepancy in consequence.
When a large financial firm is forced to absorb a $50,000 fine, for example, and an individual financial advisor is required to do the same, the individual advisor suffers disproportionately. Furthermore, while investors will view an advisor’s BrokerCheck profile before engaging them, the average investor typically will not research a firm’s regulatory history or look up its BrokerCheck profile. Thus, the harm to an advisor who signs an AWC is far more severe than that to the firm that signs one.
Hire an attorney.
As an advisor, when faced with an AWC, there are steps that are vital to mitigating any damage to your record. It is paramount that you have counsel when facing an investigation, as FINRA investigators are well aware that they can steamroll firms or advisors who are not knowledgeable about FINRA’s processes. You might not even get to the AWC or on-the-record (OTR) testimony stages of the investigation. Upon hiring counsel, your attorney will first analyze whether the alleged conduct truly constitutes a rule violation. Next, your attorney will look at the proposed sanctions and determine whether they meet FINRA’s Sanction Guidelines and prior enforcement precedent.
Then your attorney will negotiate with FINRA, regarding both the sanction to be imposed and the language to be published. During the negotiation process, should it become apparent that the conduct did not warrant the consequence, the sanction is too severe, or the language is too harsh, you can make the informed decision to force FINRA to prove its allegations and justify its sanctions at the hearing.
AdvisorLaw defends advisors against all industry threats.
While helpful, defense comes with its own risks. If you decide to litigate, you chance losing and being faced with even more severe sanctions. That’s why it is vital for any financial professional facing an investigation or AWC to hire counsel who is experienced and specifically educated on FINRA’s enforcement processes.
When advisors are faced with an industry threat, including FINRA and SEC enforcement, state regulators, the CFP Board, firm compliance, retail investors, and more, AdvisorLaw provides representation. We only represent financial advisors and wealth managers — never the broker-dealer. There is no point in your career as a financial professional that AdvisorLaw’s services can benefit you more than when you are subject to an investigation.
Ben Winograd, J.D.
Director of Enforcement