Frequently Asked Questions About FINRA Rule 8210 Requests

FINRA Rule 8210 Frequently Asked Questions

One of the tools FINRA often uses when investigating potential violations of the federal securities laws or FINRA rules is the “Rule 8210 request.” This post discusses frequently asked questions regarding Rule 8210 requests, including what is a FINRA Rule 8210 request, whether a recipient must respond and what are the best practices for responding.

What is a FINRA Rule 8210 Request?

            FINRA Rule 8210 authorizes FINRA to require member firms and associated persons to provide information, testimony and documents in response to its requests. The purpose of a Rule 8210 request is to determine whether violations of the federal securities laws or FINRA rules have occurred and should be taken very seriously. At the same time, a Rule 8210 request does not mean that FINRA has determined that there have been such violations.

Do I have to respond to a FINRA Rule 8210 Request?

            FINRA Rule 8210(c) states: “No member or person shall fail to provide information or testimony or to permit an inspection and copying of books, records, or accounts pursuant to this Rule.” A failure to respond can result in suspension and being expelled or barred under FINRA Rule 9552. It is therefore typically advisable for FINRA member firms and associated persons to respond to Rule 8210 requests.  

            There may be limited circumstances, however, where it is worth considering a refusal to respond to a FINRA Rule 8210 request, such as where the recipient no longer plans to conduct business requiring FINRA registration or intends to assert the right against self-incrimination under the Fifth Amendment. These are issues that should be carefully considered and discussed with counsel.

What are the best practices for responding to a FINRA Rule 8210 Request?

Ask for the time you need to respond. Rule 8210 requests generally ask for a response within 14 days, but FINRA staff are often amenable to a reasonable extension request. Depending on the scope of the materials requested and the complexity of the matter, you may wish to request additional time to ensure you submit the best possible response.

Tell the truth, the whole truth and nothing but the truth. As a former FINRA Enforcement attorney who now defends individuals and firms under investigation by FINRA, I have observed that those who are under investigation often run into more trouble for providing misleading or incomplete responses to FINRA Rule 8210 requests than they do for the matters initially under investigation. As a result, it is very important that responses to Rule 8210 requests are truthful and complete.

If you don’t understand what FINRA is asking you, make that clear in your response. Recipients of Rule 8210 requests sometimes misunderstand what is being asked and respond based on that misimpression. FINRA can view such responses as misleading even where the recipients were simply confused. If there is any doubt about what FINRA is asking you, make clear in your response that you are not certain what they are asking, as well as how you are construing their requests and ask them to clarify further if they would like additional information.

Coordinate with your member firm. If you receive a FINRA Rule 8210 request while still associated with a member firm, it is prudent to keep your firm in the loop as to how you are responding to FINRA’s inquiry.

Consult with experienced securities counsel. The earlier you involve an experienced securities lawyer in a FINRA inquiry, the better. Counsel can guide you through the process and help you frame your responses to a Rule 8210 request, as well as assist you in interfacing with FINRA during its investigation. Counsel can work with you to ensure that your responses are clear, well-organized, complete and accurate, but also painted in the best light for you.

Attorney Ian McLoughlin has significant experience in FINRA and securities related cases. If you are interested in a consultation regarding a FINRA Rule 8210 request, please contact Ian McLoughlin at (617) 869-4689.