Poor FINRA: its Rule 8210 letters are correspondence no one wants to get.
Whether triggered by an automated trading surveillance program, a missed disclosure, a whistleblower’s tip, or another source, a Rule 8210 investigation allows the Financial Industry Regulatory Authority to open a sweeping investigation that can encompass a firm’s entire document repository, draining an incredible amount of the firm’s time and resources.
To reduce this threat, legal teams have started proactively searching for potential red flags, investigating suspected misconduct to assess and remediate any risks before they lead to formal FINRA investigations and enforcement actions.
The challenge is that the pertinent facts are rarely evident when you first embark on an investigation. Ferreting out the truth, especially when the telltale facts are hidden, requires smart, sophisticated e-discovery and analytics tools. Therefore, in-house legal teams and outside counsel are turning to smart technology to develop leads that can move an investigation forward efficiently and with swift resolution.
When you uncover a potential FINRA infraction, you likely have little to go on: You probably don’t know who is involved or or the circumstances. But you can go to the source of the documents that triggered the investigation and work backward, starting with interviewing the custodians who created the documents in question before expanding the scope of the investigation.
A legal hold application integrated with collection tools can expedite this process. By sending known document custodians a questionnaire asking for additional information while simultaneously collecting their documents for review, you can prepare for in-person custodian interviews sooner.
The clock is the enemy when investigating potential misconduct: the goal is to get to the heart of the matter as quickly as you can by promptly identifying the key witnesses, documents and facts. The faster you can isolate the witnesses who hold critical documents and link them to other custodians, the faster you can unlock the insights that will let you accurately assess the matter.
As you gather facts from your custodians, you can apply multiple layers of advanced analytics tools to unearth important details earlier. Top-level analytics tools can help you understand the entire social network of communications across a document population, which highlights the main players. Visual analytics can then reveal these individuals’ communication patterns, pinpointing additional witnesses for interviews and targeted collection.
With the right visualization tools, you’ll simultaneously gain insight into the relationships between all of your documents, custodians, timelines and more, so you can drill down based on what piques your interest. Advanced tools can also help you avoid a fishing expedition: These tools create a methodical “breadcrumb” history of precisely how you arrived at the data in your current searches, which you can organize into folders for further review and application of technology-assisted review (TAR).
TAR, well known for its proficiency in accelerating litigation document review, can play an equally crucial role in internal FINRA investigations.