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Regulation and Compliance > Federal Regulation > FINRA

Here’s What Gets Brokers Barred, According to FINRA

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The majority — 70% — of the enforcement cases brought annually by the Financial Industry Regulatory Authority are against individual brokers, with 30% levied against broker-dealers, according to Chris Kelly, Deputy Head of Enforcement.

“We’ve been remarkably consistent if you look back at the statistics for the last couple of years,” in regards to enforcement cases, Kelly said on a recent FINRA Unscripted webcast.

In a typical year, he said, “we bring roughly 400 to 550 cases against individual brokers.”

When does FINRA seek to bar a broker from the industry? For “egregious misconduct,” Kelly said, usually involving fraud or conversion.

“In other words, stealing from a customer,” Kelly relayed. Another violation that can commonly result in a bar is if a broker refuses to cooperate in an investigation.

FINRA sends “what we call 8210 requests for information or for testimony,” Kelly explained, and if the broker refuses to provide that information or testimony, that will normally result in a bar.

Also, “if you cheat on a qualification exam to get into the industry, that usually results in a bar as well,” Kelly said.

As FINRA has no subpoena power, Rule 8210 is its “mechanism to get information from individuals who are registered or associated with a member firm. So, if we want documents, we want the answers to questions or we want to take your testimony, we issue what we call a Rule 8210,” Kelly relayed.

“A refusal to participate in testimony or to give us information is a serious violation because it prevents the very core of what we do, prevents our ability to investigate misconduct,” he said. “The normal sanction for that refusal is a bar.”


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