All registered brokerage firms and broker-dealers must adhere to the regulations set by the Financial Industry Regulatory Authority (FINRA). While these rules primarily govern customer-related activities, they also impose requirements for interactions with FINRA, including the disclosure of records and information during enforcement investigations. Among the crucial rules in this domain is FINRA Rule 8210, which grants FINRA staff the authority to conduct on-the-record (OTR) interviews. Failure to respond appropriately to an "8210 letter" can result in penalties and even suspension. Prior to participating in an OTR interview, brokers and firm representatives should diligently prepare and fully understand the process involved.

 

 

Responding to an 8210 Letter from FINRA:

When receiving an 8210 letter from FINRA, responding effectively becomes a process of its own, influencing subsequent stages of the investigation. The following steps are recommended for brokerage firms or brokers in this situation:

Review the Letter with Legal Counsel:
https://drive.google.com/file/d/1oClkokZovPtKYVhgzqnGv6hlvAc4lDTZ/view?usp=sharing Upon receiving an 8210 letter, brokerage firm representatives and individual brokers should promptly review the letter with legal counsel. Attempting to handle the matter independently can lead to costly mistakes. Seeking legal counsel early ensures that the firm or broker can act upon sound legal advice and fully comprehend the necessary actions.

Counsel's Contact with FINRA:
After reviewing the 8210 letters, the legal counsel should initiate contact with FINRA. This communication aims to establish a respectful working relationship and foster cooperation. Even when adopting a defensive stance, it is often advantageous for the firm or broker to work with FINRA staff to achieve a favorable outcome given the circumstances. https://goo.gl/maps/rkcLATw2SJVqtY3T9

Determine the Need for an Extension:
Based on a thorough review of the 8210 letters, the recipient should assess whether requesting an extension is necessary. In addition to OTR interviews, the letter typically includes requests for extensive records. If more time is required to collect, review, and submit these records than initially provided by FINRA, a good-faith extension request should be submitted promptly for the best chance of approval. https://www.natlawreview.com/article/preparing-record-otr-interview-what-brokers-need-to-know-about-finra-rule-8210

Evaluate the Potential for Negotiation:
8210 letter recipients should promptly evaluate whether it is appropriate to negotiate the scope of FINRA's requests. This may include negotiating the timing or location of an OTR interview. If compliance is deemed unfeasible, unduly burdensome, or unnecessary for FINRA's investigations, presenting a well-supported case and proposing a reasonable alternative can be an effective strategy.

Thoroughly Prepare and Submit Responsive Documents: With a clear understanding of the requirements, brokerage firms and brokers should focus on complying with FINRA's record requests. It is crucial to examine all relevant repositories and storage media while carefully preserving the attorney-client privilege. Close collaboration with legal counsel is essential to avoid inadvertently waiving the privilege and to ensure the production of all non-privileged responsive documents.

 

 

 

 

Preparing for an On-the-Record Interview with FINRA:

Rule 8210 incorporates provisions for on-the-record interviews, which are vital aspects of the process. Thorough preparation is necessary since these interviews are typically lengthy and may last several days. https://docs.google.com/presentation/d/1yqqBUYGq2yPOVJoa7DwkcDYc2Uef8vzghfTCFqB_dVY/view#slide=id.p During an OTR interview, FINRA staff members can ask a multitude of questions, with limited ability for the council to object. Therefore, the following steps are crucial for effective preparation:

Understand the Scope and Nature of FINRA's Investigation:
To prepare effectively for an OTR interview, the witness must have a clear understanding of the investigation's scope, nature, and specific allegations under investigation, which can range from violations of FINRA Rules to federal securities laws.

Anticipate Potential Questions and Prepare Responses:
https://docs.google.com/document/d/1LIpwwO-M_3FDXJ0o3bbvGvgO-DD6t-wHmSdi1pTlgA0/view Significant effort should be dedicated to anticipating potential questions and preparing responses. Avoiding surprises during the interview is essential. This process should be collaborative, working in conjunction with the review and preparation of responsive documents.

Practice Prepared Responses Aloud:
Witnesses should practice their prepared responses aloud, ideally in front of a mirror. This helps ensure thoroughness and enables the development of a confident and non-confrontational tone.

Prepare for Unanticipated Questions:
In addition to expected questions, witnesses should also prepare for unanticipated questions, both those they know the answers to and those they don't.

Conduct Mock OTR Interview Sessions:
Conducting mock OTR interviews with defense lawyers posing as FINRA staff is highly effective. This process allows for realistic simulations of the interview, followed by debriefings to address concerns and identify areas requiring further preparation. https://docs.google.com/drawings/d/1nTeLQNDGOYlE8HWwVfEhHuqWccXh7cnSlUt7KCy3pSw/view

Develop a Strategy for Objections and Attorney-Client Communications:
Developing a strategy for objections by legal counsel and seeking advice during the interview is critical to prevent inadvertently making statements against the witness's or firm's interests on the record.

Review OTR Interview Day Procedures:
To minimize uncertainties and errors, meticulously plan every aspect of the OTR interview day. This includes determining meeting times and locations, scripting communications with FINRA staff before and after the interview, and ensuring the witness is adequately prepared mentally and emotionally.

 

 

 

 

Conclusion

Preparing for an on-the-record interview with FINRA, as governed by Rule 8210, requires comprehensive preparation and understanding of the investigation's scope. https://sites.google.com/view/thenationallawreview/the-national-law-review By diligently anticipating questions, practicing responses, and conducting mock interviews, witnesses can enhance their performance during the OTR interview process. Developing a strong strategy for objections and maintaining a clear line of communication with legal counsel throughout the process are additional important factors to consider.