Michael discusses the differences in examiners — and, potentially — examination results from District Office to District Office. Remember, however, that such differences aren’t supposed to exist! That’s why the Office of Disciplinary Affairs exists. I suppose the question is whether the ODA is doing its appointed task of achieving consistency throughout FINRA. – Alan
My view of FINRA examiners is akin to Forrest Gump’s view on life: FINRA examiners are like a box of chocolates. You never know what you’re gonna get. FINRA examiners vary widely in age, experience, and exuberance. If you get the wrong chocolate from the wrong box, these disparities can adversely impact not only the amount of time and money spent on an exam, but also the results of the exam. While you might not be able to select a new chocolate from a different box, you may be able to make your selected chocolate more palatable.
From Which Box Did Your Chocolate Come?
While most companies with offices throughout the country strive to produce a consistent product, not all of them can accomplish this challenging feat. For example, a chain restaurant at one location may serve better food, offer better service, and provide a better overall experience than the same chain restaurant at another location – no matter how hard the corporate office pursues homogeneity. The different management and staff at each location all impact the overall product. The same is true of FINRA and its 14 district offices.
Certain conduct being reviewed by one FINRA office may be resolved early and informally, while similar conduct being reviewed by another FINRA office may result in multiple 8210 letters, OTRs, and a referral to Enforcement. Because FINRA does not publish information regarding exams resolved through informal disciplinary action, there is no way to measure such discrepancies among its offices. FINRA, however, does publish the results of exams resolved through formal disciplinary action. A review of those statistics reveals consistent and significant differences in the number of formal actions brought by its district offices. It is reasonable to conclude that these differences are attributable, in part, to cultural differences among the offices. Some offices are simply more aggressive than others. Knowing the reputation of the office with which you are dealing can impact how you handle your exam if issues arise.
It is next to impossible in most instances to have your exam transferred from one office to another office. This does not mean that you are without recourse. Knowing and delicately appealing your case to the voices of reason within the office, and, if necessary, delicately appealing your case to those outside the office are both viable options. Do you run the risk of stepping on toes if you appeal up the ladder? Of course you do, but less than you think. FINRA is a very hierarchical organization. Appeals of this nature are commonplace, and are almost invariably heard by the higher-ups. Needless to say, be certain that you have a story to tell about the facts of your situation and/or concrete evidence that your situation is being handled differently than similar situations. You can cry wolf only so many times.
Which Chocolate Did You Get?
I know a number of people who have been FINRA examiners and exam managers for ten-plus years. Most of them are not going anywhere. These “lifers” generally are not looking to rock the boat that they’ve rowed for a number of years, and that they plan to row into retirement. I also know a number of people whose first foray into the workforce was as a FINRA examiner. Generally speaking, these are the examiners with which you need to concern yourself. The key to dealing with younger, less experienced examiners is ascertaining their motivation. Are they simply not understanding and appreciating activity because of a lack of experience or are they bucking for a promotion, looking to use your exam as a means of self-promotion? Unfortunately, there are too many examiners who fall into the latter category because of how the system is set up. I am unaware of any accolades awarded to examiners who close the most exams without pursuing formal action. On the other hand, I know of plenty of kudos bestowed upon, and monetary awards and promotions provided to, those who develop formal actions.
The younger, less experienced examiner may not have a sufficient understanding of how the industry works, and he may mistakenly misinterpret innocuous conduct as nefarious conduct. If that is the case, it is worth the time and energy to educate this examiner to hopefully avoid having the exam spiral out of control. Further, the examiner may appreciate your efforts and openness, and give you the benefit of the doubt on other matters. Unfortunately, I expect that we will see more inexperienced examiners in the coming years. Due to budget constraints, FINRA has cut back on its training program for new examiners. Budget constraints also may lead FINRA to hire more inexperienced examiners who generally are cheaper than their experienced counterparts.
The best way to deal with the overly aggressive examiner typically is to climb the ladder. And you should climb higher than just his manager, who likely does not want to discourage his exuberance – however misplaced it may be. Do not be overly concerned with stepping on this examiner’s toes or the backlash that may follow, as there likely is little that you can do to change his view of the matter, or to prevent him from scorching the earth to build a case against you. Frame your case around the facts of your situation – not the actions of the overly aggressive examiner. FINRA management will defend attacks on its own, but it also likely will know the source of your discontent, as your situation probably is not the first time that this examiner has been accused of going too far.