FINRA’s Rule 2080 requires that you meet at least one of the following criteria: A) the claim, allegation, or information is factually impossible or clearly erroneous; B) the registered person was not involved in the alleged investment-related sales practice violation, forgery, theft, misappropriation, or conversion of funds; or C) the claim, allegation or information is false.

Firm compliance attorneys only represent the interests of their benefactor: the firm. If you choose to be represented by firm attorneys, you should be advised of the inherent conflict of interest of representing two parties whose interests may not perfectly align. You may wish to hire outside counsel if you feel that you are being forced to contribute to a settlement or are being saddled with a negative disclosure that you never earned.

If you have received a FINRA inquiry letter (8210), you should immediately hire an attorney for representation. These inquiry letters are typically the first chance you will have to respond immediately and succinctly to FINRA about a possible rule violation. Since the consequences of any inaccurate response include the inability to work in the industry ever again, these letters should not be treated lightly. Any response will be the evidentiary basis for FINRA to determine rule violations and/or possible false statements by the advisor.

Inquiry letters often lead to investigations. If FINRA believes that there is a chance that a FINRA rule has been violated, their next step will be to request an On-the-Record interview with the advisor which is the beginning of a formal investigation. The advisor should take this step very seriously as the outcome may lead to sanctions, suspensions, or barring.

An AWC (Acceptance, Waiver, and Consent Order) is similar to a plea bargain or settlement. After FINRA has investigated and gathered evidence against a financial advisor for a possible rule violation, they may negotiate a suspension and/or fine to draw the case to a conclusion. If the advisor signs the AWC they are accepting the plea deal, consenting to the sanctions, and waiving nearly all possible arguments to fight the AWC in the future.

An AWC is not always offered to settle a particular case. If an advisor is afforded an option to sign an AWC, there are many factors to weigh. These include the cost of litigation if not signed, the advisor’s career trajectory, legacy concerns, whether the advisor feels the settlement is fair and reasonable, business harm of the public AWC disclosure, and the timeframe of fighting the outcome.