Once again – twice again, actually – FINRA has used Rule 8210 as a cudgel, beating the poor unfortunate recipients of the “request” for documents and information into submission, or worse.  This has got to stop.

The first case is a repeat of one I blogged about earlier this year, and it involves the use of 8210 to demand that a computer be produced to FINRA so it can make a complete copy of the hard-drive.  Here’s what happened.  At 8:45 am on Wednesday, I received by email an 8210 letter, telling me that my client had to provide “immediate access to FINRA staff to inspect and copy” “[h]ard drive(s), Google drive(s), and USB thumb drive(s).”  The letter also included this threat/promise; note that the use of bold and underlining appears in the original, just to ensure these words are not skipped:

If your client fails to provide immediate access to FINRA staff of the requested information, they may be subject to the institution of an expedited or formal disciplinary proceeding leading to sanctions, including a bar from the securities industry.

At 9:00 – 15 minutes later – the examiners showed up at my client’s office and demanded that they be provided the computers so the hard drives could be copied, in their entirety.  Now remember from my previous blog post that I have been down this very road before with FINRA.  The last time this happened, in the face of essentially the same 8210 letter, my other client elected to produce the computer rather than face an Enforcement action.  Despite that, sadly, the matter still eventually ended up as an Enforcement case.  At the hearing in that case, I objected to the 8210 request as being unlawful, as it exceeded the scope of the rule (which does not permit computers to be seized and imaged).  The Hearing Officer asked me if an objection had been lodged at the time the initial 8210 request was served, and I had to say no.  Well, then, ruled the Hearing Officer, you waived your right to object here by not objecting sooner.
Continue Reading

If you’ve read this blog for even a short while, you know my feelings on Rule 8210, or, more specifically, how FINRA uses that rule, i.e., as a cudgel to keep member firms and their associated persons in line. Endless 8210 requests for documents and information, sometimes asking multiple times for the same stuff, each

Once again, Rule 8210 has me frustrated. And angry.  Well, not the rule itself, but the aggressive manner in which FINRA continues to wield it, and how its scope is interpreted by hearing panels called upon to consider cases involving what seem to me, at least, to be troublesome uses of Rule 8210.

Let’s start

My dissatisfaction with FINRA’s Rule 8210 and, more specifically, the aggressive manner with which FINRA wields that rule, has been the subject of several prior blogs.  I happy to report that my partner, Michael Gross, has drunk the Kool-Aid, and joined me in tilting at this windmill.  – Alan

The first paragraph of a paper

Let’s play pretend.  Can you imagine what FINRA would do to a respondent broker-dealer in an Enforcement action that announced on Day Five of the hearing – i.e., during the “final phase” of the hearing – that – whoops! – it had forgotten to produce certain documents that it should have produced eight months before

As readers of this Blog know, Rule 8210 is a favorite subject of mine to complain about, particularly the frightening vigor with which FINRA constantly tests the limits of the rule.  What follows are some very helpful FAQs about Rule 8210 from Michael Gross.  –  Alan

The Scope of the Rule

Can FINRA really ask

I read today about a lawsuit that two registered persons, one of whom is a Chief Compliance Officer, filed against FINRA in federal court a couple of weeks ago. Mind you, lawsuits against FINRA are not particularly common, given the fact that FINRA has “absolute immunity” against monetary claims arising out of its regulatory activities.

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