Challenging FINRA’s expansive powers to request information and documents under Rule 8210 can be a career-ending move, as demonstrated by In the Matter of Gregory Evan Goldstein, Release No. 71970. The case involved a FINRA investigation of Gregory Evan Goldstein, an associated person at Marquis, a FINRA member firm. FINRA ordered Mr. Goldstein to produce documents related to “Wall Street at Home,” a non-FINRA company in which Mr. Goldstein was a majority owner. When Mr. Goldstein refused, FINRA barred him from association.
On April 17, 2014, the Securities and Exchange Commission affirmed FINRA’s decision, confirming that FINRA has a right to seek documents related to any business controlled by a FINRA member, even if the business being targeted is not itself a FINRA company. FINRA is not required to “explain its reasons for making the information request or justify its relevance,” the SEC stated, and the FINRA member may not “second guess” the requests. Although FINRA’s requests to Mr. Goldstein concerned his outside business activities, the SEC still found the requests proper because FINRA had reason to question whether Goldstein’s activity at Wall Street at Home involved Marquis. Goldstein insisted he was under no obligation to produce documents belonging to Wall Street at Home, since it was a thirdparty, non-member firm. But the SEC interpreted Rule 8210 broadly, finding it has no limitations on its scope other than that the requests be related to “any matter involved in the investigation.”
The decision is significant because it shows that FINRA investigations can sweep up documents and information related to non-FINRA companies. Refusing to comply with FINRA’s requests can be fatal to a member’s career, as Mr. Goldstein’s expulsion from FINRA association demonstrates.
The SEC’s full decision may be found at https://www.sec.gov/litigation/opinions/2014/34-71970.pdf.