At a recent industry conference in New York, members of FINRA’s Office of Hearing Officers gathered to discuss current issues and topics relevant to FINRA disciplinary hearings. During one of the sessions, a Hearing Officer panelist lamented the format of the Answers he typically receives from the respondents in his cases. Almost without exception, respondents file Answers that merely admit or deny the various allegations contained in the Division of Enforcement’s Complaint, without providing any explanation of the facts and circumstances underlying the dispute.

If only, he mused, respondents would tell their side of the story right from the start, it would make his job as factfinder so much easier – and clearer.

As counsel for brokers and broker-dealers who find themselves the unfortunate subject of Enforcement’s attention, I have drafted and filed, many times, the sterile admit/deny answers the Hearing Officer described and, when he expressed his desire for more flavorful pleadings, I could not agree more.

In fact, that used to be my practice. Answers always began with a narrative introduction responding directly to Enforcement’s allegations, setting forth the key facts and players relevant to our defense. Were it possible, I would still be filing those Answers today.

Alas, I no longer advise my clients to do so. Experience has taught me that filing a narrative Answer has a sure-fire, immediate, and unavoidable response: a post-Complaint 8210 request. Enforcement, utilizing the full extent of its 8210 power, unleashes upon the respondent requests for documents, identifications, information relating to the narrative, and even demands further on-the-record testimony. (Of course, even a sterile admit/deny answer can invoke this response from Enforcement. In a recent case, my client stated in the Answer that, at all times, it acted “in good faith.” Enforcement immediately sent an 8210 asking the firm to explain what it meant by “good faith.”)

Now, it is certainly not my position that post-Complaint 8210s are never warranted. Indeed, I can think of numerous examples where they would be entirely justified. The problem is that, without some check or balance on its power, Enforcement is able to serve 8210s that are duplicative, harassing and frivolous.

A respondent’s only recourse in receiving such a request is to ask the Hearing Officer assigned to their case to quash the request. Hearing Officers rarely – assuming it’s happened at all – grant respondents’ motions to quash. So, instead of preparing for hearing, respondents find themselves spending time and money further explaining the meaning of “good faith.”

If the Office of Hearing Officers is firm in its desire for more detailed Answers, it should view post-Complaint 8210 requests critically, and examine whether something included in the Answer is truly new information upon which new discovery is warranted and, if not, quash it. Until then, I will continue to advise my clients to avoid narrative Answers, and save the details of their defense for hearing, even if this means disappointing the Hearing Officer.

For more information on Rule 8210, one of Alan’s pet peaves, feel free to read two prior articles he wrote on the subject, To Infinity And Beyond: Rule 8210, previously published in Law360, and I (Still) Got Them 8210 Blues, a follow-up piece published as an Ulmer & Berne client alert.