Defending FINRA Investigations

By Mark J. Astarita, Esq.

FINRA Rule 8210

FINRA Rule 8210 (Provision of Information and Testimony and Inspection and Copying of Books) is the starting point of virtually every FINRA enforcement proceeding, as it gives FINRA the authority to request documents and testimony from firms, registered persons and, in FINRA’s view, other persons and entities related to a registered person or entity.

The relevant portion of Rule 8210 is as follows:

For the purpose of an investigation, complaint, examination, or proceeding authorized by the FINRA By-Laws or rules, an Adjudicator or FINRA staff shall have the right to:

(1) require a member, person associated with a member, or any other person subject to FINRA’s jurisdiction to provide information orally, in writing, or electronically (if the requested information is, or is required to be, maintained in electronic form) and to testify at a location specified by FINRA staff, under oath or affirmation administered by a court reporter or a notary public if requested, with respect to any matter involved in the investigation, complaint, examination, or proceeding; and

(2) inspect and copy the books, records, and accounts of such member or person with respect to any matter involved in the investigation, complaint, examination, or proceeding that is in such member’s or person’s possession, custody or control.

What is involved in a Rule 8210 Request?

Typically, the request for information is sent after FINRA gets a tip, referral, complaint, examination or termination of registration (Form U-5). In fact, FINRA claims that it sends an 8210 Request to every broker whose U-5 indicates a termination for any reason other than “voluntary.”

For our purposes, an 8210 Request is similar to a subpoena for documents. The request will require the production of documents and written responses to questions. FINRA may follow up on the 8210 Request with a requirement that the individual appear for testimony in an “on-the-record interview” (OTR). For more information on FINRA’s OTR, read The SEC Serves a Subpoena, or FINRA wants an OTR. Now what?

While the request is similar to a subpoena for a registered person or entity FINRA’s authority to demand documents and information is broad much broader than a subpoena in a civil suit by private parties.

Then, in 2013 the SEC approved amendments to Rule 8210 to increase that authority.  That amendment specified, among other things, that FINRA staff and adjudicators may inspect and copy information in the possession, custody, or control of a member firm, associated person, or person over whom FINRA has jurisdiction. The amended rule also allows FINRA to serve a Rule 8210 request on an attorney for a member firm, associated person, or person subject to FINRA’s jurisdiction. The amendments became effective on February 25, 2013. See Regulatory Notice 13-06.

Compliance Requirement

Rule 8210 is a powerful investigative tool for FINRA, which can be the precursor to significant fines and sanctions. If there was any doubt about the requirement to comply, Rule 8210 makes the point clearly:

(c) Requirement to Comply

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 comply often results in an immediate enforcement proceeding and a permanent bar from the industry. However, with experienced counsel, Rule 8210 requests are often negotiable, and can be modified if a well-reasoned objection is raised to the Staff member who sent the request. We have had significant success in negotiating these requests.

Knowing how to respond, when to object, and when to cooperate is key to a successful outcome.

Receiving a FINRA 8210 Request can be a daunting experience. While the initial request may seem overwhelming, it is important to note that the scope of the request can be negotiated and narrowed down.

FINRA’s requests are typically extremely overbroad. FINRA investigators and examiners do not always understand the firm’s business practices, and therefore make very broad requests. Or, they are not aware of the time and expense of responding to the request.

To ensure that you are responding appropriately, seek the assistance of an experienced FINRA defense attorney, such as the attorneys at Sallah Astarita & Cox, LLC. FINRA defense attorneys have extensive knowledge of FINRA regulations and experience in dealing with FINRA Enforcement Staff and 8210 requests. They can help you navigate the investigation process and negotiate the scope of the request, potentially reducing the amount of information that needs to be provided.

Consult with an Experienced Securities Attorney

It is important to note that simply responding with written answers to the requests without the review of a securities attorney can be a significant mistake. FINRA investigations are complex and require an understanding of securities laws and regulations. FINRA will use those answers for the rest of the proceeding and may use them against you. A securities attorney can review the request and determine what information is necessary to provide and what is not. This can help ensure that the response is accurate and does not inadvertently provide unnecessary information.

For a further discussion of compliance with the Rule and tips for doing so, see Tips for Responding to an SEC Subpoena. There are differences between an 8210 request and an SEC subpoena, but the underlying concepts are the same.

If you wish to discuss a FINRA document request, call Sallah Astarita & Cox, at 212-509-6544. Their representation is nationwide, and the call is free.

Securities Attorney at Sallah Astarita & Cox | 212-509-6544 | | Website | + posts

Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.

He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page -, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.