FINRA Enforcement: Intimidation Tactics Against Advisors

Imagine you’re driving down the highway when you’re suddenly pulled over and accused of speeding. Do you fight the ticket or pay for it? We all know it’s the police’s sworn duty to protect the highway, but they also need to meet a monthly quota. Why should your record be tainted over a meaningless speeding ticket?   

That situation is all too similar to FINRA’s enforcement strategy – it intimidates advisors with an array of scare tactics, even when the allegations and cases are completely meritless or false. One example is FINRA’s presentation of settlement offers, or an Acceptance Waiver and Consent (AWC), for advisors to sign. An AWC is essentially an advisor’s plea bargain with FINRA to avoid fines, suspensions, statutory disqualification (SD), and, in extreme cases, being barred from the industry entirely. 

When advisors sign AWCs, they aren’t technically admitting or denying any of FINRA’s “findings.” Instead, they’re consenting to a sanction and an entry of the findings on their BrokerCheck profiles and CRD reports. That’s why signing an AWC is often not in the best interest of the financial professional. But that doesn’t stop FINRA from bullying advisors into signing AWCs within a week of delivery. If they don’t sign, advisors could face expensive enforcement proceedings or even disgorgement claims for “ill-gotten gains.”

Due to the high stakes involved at this level, it is vitally important that advisors seek counsel or representation. Each step of the process is set up for enforcement to build a case against the advisor. Admissions at any point in the timeline have the potential to upend a future settlement or negotiation and cost financial advisors their entire careers.

Another way that FINRA intimidates advisors is by preying on registered representatives once its two-year statute of limitations has eliminated its jurisdiction. FINRA knows that advisors are frequently misinformed and unprepared during such times. It purposely goes after advisors, hurting not only their reputations but also their ability to have a successful career in the financial field – all of this coming from a self-regulating organization that acts as a so-called government entity. How can FINRA operate without any due process? Clearly, FINRA assumes that advisors are guilty until proven innocent. 

Whether facing an enforcement action or a regulatory inquiry from FINRA, the CFP Board, or the SEC, the best option for an advisor is to lawyer up and fight. Make FINRA prove that you were in the wrong. Think of that FINRA investigator as a highway patrol officer who’s just trying to meet his monthly quota. Once he hits his flashing lights, it’s time to call securities-enforcement action experts. It’s time to call AdvisorLaw. 

AdvisorLaw provides representation against all threats, including FINRA Enforcement, state regulators, the CFP Board, firm compliance, and retail investors. Contact us to discuss AdvisorLaw’s enforcement defense services. Our services were created exclusively for financial advisors, and the consultation is free.

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