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 Two (More) Scary Tales Of FINRA’s Abuse Of Rule 8210