Welcome to #finraFridays!
In this Blog, we address the mysteries of FINRA’s Conduct Rules, and its investigative and disciplinary process so that those of you who are facing scrutiny by the regulator are better prepared to defend yourself. This week, in anticipation of the 2024 FINRA Annual Conference in May, we are highlighting topics where we have questions and hope to get answers to issues of concern for brokers, firms and the investing public. What questions do you have that you wanted addressed at this year’s conference? We invite your questions in the comment section.
This Week:
What Do We Want to Ask FINRA at its
024 Annual Conference?
FINRA will be conducting its largest conference of the year this May 14-16 in Washington, DC. In anticipation of attending the conference again this year, I thought it was important to highlight five targeted items that I want to hear discussed. These are my five, but I invite you to share your thoughts on topics you believe need to be addressed at this conference.
- At last year’s Annual Conference, one of the hot topics that was included as part of many sessions was what the staff calls “off-channel” communications – which are the various alternate ways we communicate through texts and social media platforms that are not captured or reviewed by a firm’s compliance.
Also, the head of FINRA’s national exam program turned some heads when he questioned whether certain emojis in a text from a customer to a broker or firm representative could represent a customer complaint requiring reporting under FINRA Rule 4530.
Modernizing Off-Channel Communications Supervision is on the agenda for this year’s conference and it will be important to hear the latest progress FINRA has made in helping to define the boundaries for supervising these communications.
- On FINRA’s agenda is a session on FINRA’s Disciplinary Hearing Process. It says it will discuss “FINRA’s disciplinary hearing process which highlights distinctions between self-driven hearings and administrative law judge hearings.” Since I am not aware of either “self-driven hearings” or “administrative law judges” being part of FINRA’s disciplinary hearing process under FINRA Code of Procedures 9000 series, this should be interesting.
A plenary session on Wednesday morning entitled “Ask FINRA Senior Leaders” is described as having the panelist “address questions relating to FINRA’s risk-based examination program, disciplinary actions …among other topics.”
This will be an opportunity for senior leaders to explain the dramatic and continued drop in formal disciplinary actions brought and the focus on those cases that appear to be of less regulatory significance. This was the subject of my recent Blog post that can be found at https://carletonlaw.net/finras-disciplinary-hearings-disappearing-act/
- Advances in artificial intelligence, particularly over the past year, are affecting all aspects of our lives and businesses. The securities industry is no exception. So, I am glad to see that FINRA has included a session on Generative Artificial Intelligence and Large Language Models: A Look Ahead.
Since most firms, like many sectors of business, are likely behind in addressing AI, its discussion of the opportunities and effective practices firms can employ to minimize risk is a session I will want to attend.
- Between COVID and significant technological advances over the past few years, firms have changed their business models so that more work is being conducted remotely and from personal residences. This has created supervisory challenges for firms.
FINRA’s most recent response has been the adoption of FINRA Rule 3110.19 (Residential Supervisory Location) and FINRA Rule 3110.18 (Remote Inspections Pilot Program), both of which will become effective this summer. This raises many more logistical and compliance questions that I hope will be discussed in the Tuesday morning session, Developments in Remote Supervision.
- The new reality in our financial world is the increasing threat of cyber-attacks. Unfortunately, is not something that is coming, but is already here. FINRA has put together a panel of experts to speak about this entitled, Leaders from US Government Provide Their Perspective on the Financial Industry Threat Landscape and Defending it From Cyber Attacks.
I am hoping that the speakers will address realistic steps that not only large firms, but smaller firms and individual brokers and investors should take to address this threat.
I look forward to seeing you at the FINRA Annual Conference this year from May 14-16, 2024, in Washington, DC. If you see me, please do stop and say hello.
If you are an NASD/FINRA Enforcement Alum and are interested in attending the reunion reception Carleton Law is hosting on Monday night, May 13, please send me a note at info@carletonlaw.net to get more information and RSVP for the event.
Gary Carleton focuses his practice representing individuals and firms facing FINRA investigations and disciplinary proceedings and appeals. He also serves as co-counsel with attorneys who have clients facing a FINRA investigation or disciplinary proceedings Contact Gary Carleton at 202.744.6297 or gary@carletonlaw.net to set up an initial consultation.
In Case You Missed It – You can find prior blogs on the FINRA investigative and disciplinary process at www.carletonlaw.net and go to the Blog tab. #finraFlashback blogs in which we discuss notorious FINRA disciplinary proceedings can also be found at www.carletonlaw.net.
The prior topics include:
* Firms Attracting Brokers Through Forgivable Loans: The Two-Edged Sword
https://carletonlaw.net/firms-attracting-brokers-through-forgivable-loans-the-two-edged-sword/
* SEC’s Seemingly Endless Delays in Ruling on FINRA Disciplinary Appeals – Justice Delayed Means Justice Denied
https://carletonlaw.net/secs-seemingly-endless-delays-in-ruling-on-finra-disciplinary-appeals-justice-delayed-means-justice-denied/
* Tribute to Barry Goldsmith
https://carletonlaw.net/tribute-to-barry-goldsmith/
* FINRA’s Disciplinary Hearings Disappearing Act
https://carletonlaw.net/finras-disciplinary-hearings-disappearing-act/
Finding Your Way Back from Statutory Disqualification
https://carletonlaw.net/finding-your-way-back-from-statutory-disqualification/
* FINRA’s Recent Regulatory Notice on Forgeries Does Not Go Far Enough
https://carletonlaw.net/finras-recent-regulatory-notice-on-forgeries-does-not-go-far-enough/
* Guarding Against Excessive Trading in a Customer’s Account
* Keeping Stockbrokers Out of Trouble by Updating Their FINRA Form U4 Filings
https://carletonlaw.net/keeping-stockbrokers-out-of-trouble-by-updating-their-finra-form-u4-filings/
* Why FINRA’s Disciplinary Decisions are so “Appealing”
https://carletonlaw.net/why-finras-disciplinary-decisions-are-so-appealing/
* FINRA Flashback – FINRA’s Investigation Uncovers Stock Manipulation
https://carletonlaw.net/finra-flashback-finras-investigation-uncovers-stock-manipulation/
* FINRA Flashback to Stratton Oakmont
https://carletonlaw.net/finra-flashback-to-stratton-oakmont/
* Where have all the FINRA Members (and disciplinary actions) gone?
https://carletonlaw.net/where-have-all-the-finra-members-and-disciplinary-actions-gone/
* Special Considerations for Small Firms when Negotiating Settlements with FINRA https://carletonlaw.net/special-considerations-for-small-firms-when-negotiating-settlements-with-finra/
* Receiving that First Request for Information (a Rule 8210 Request) https://carletonlaw.net/receiving-that-first-request-for-information-a-rule-8210-request/
* Pre-Wells Notices – An Early Opportunity to Discover FINRA’s Evidence and Present Your Case
* Understanding the Significance of FINRA’s Limited Jurisdiction; https://carletonlaw.net/315-2/ and
* How Old is Too Old for a FINRA Disciplinary Action
https://carletonlaw.net/how-old-is-too-old-for-a-finra-disciplinary-action/
About Carleton Law PLLC
Getting a call from FINRA or SEC Enforcement telling you that your work as a securities broker is under investigation could be the worst day of your life. You have worked hard for years building your business. Now, with one wrongful allegation you can see it all swept away. But with expert counsel, it does not have to end that way.
For more than 30 years, Gary Carleton was the attorney conducting those investigations at FINRA and SEC and now his firm, Carleton Law PLLC, brings that savvy experience to bear to advocate for brokers and FINRA firms who find themselves in that dreaded position. Carleton Law focuses on the individual needs of each client to guide them through the maze of the investigative and disciplinary process.
Carleton Law PLLC | 2001 Massachusetts Avenue NW, Washington, DC 20036 | info@carletonlaw.net
The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information is for general informational purposes only. Readers of this article should contact their attorney to obtain advice with respect to any particular legal matter. No reader should act or refrain from acting on the basis of information contained herein without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this article does not create an attorney-client relationship between the reader or user and the article author or law firm.
Attorney Advertising – Gary Carleton, Principal of Carleton Law, is admitted to practice law in the State of New York and the District of Columbia. This article may be considered attorney advertising.