Earlier this week, J. Bradley Bennett, Executive Vice-President, Enforcement for FINRA, spoke at a gathering hosted by SIFMA’s Compliance & Legal Society. Bennett’s remarks purported to bust common myths about the FINRA Enforcement program he leads—myths like FINRA picks on larger firms and complexes, or parties will do better if they litigate with FINRA, or FINRA somehow targets chief compliance officers. Bennett endeavored to bust these particular “myths” and some others, pointing out, for example, that most of FINRA’s 1,400 case enforcement docket is focused on small firms or single-broker matters. He also noted that in 90 percent of its litigated matters, FINRA proves liability and is awarded sanctions consistent with what they would have obtained in settlement. (Of course, everyone who litigates expects to be in that lucky 10 percent.)
Of particular interest, however, was Bennett’s repeated entreaties throughout his remarks to “ask for a meeting” with him and his senior staff. Indeed, he indicated his surprise at the paucity of such requests. Think that an 8210 (request for documents and information) is overbroad or outside the scope of a regulated business? At the outset, consider whether it’s worthwhile to provide it anyway—Bennett believes the honest citizen welcomes the constable’s knock on the door. But, if on reflection you decide it’s out of bounds, ask for a meeting! Think that FINRA is just piling on in a multiple-regulator enforcement action, where it has no independent jurisdiction or particular expertise? Ask for a meeting! Bennett indicated FINRA has no interest in pursuing actions solely for a place at the table. And, according to Bennett, FINRA Enforcement wants to be judicious in its use of OTRs (on the record testimonies), and the staff should consider telephonic interviews and background questionnaires to make better use of everyone’s time. If that is not happening in your matter, ask for a meeting!
Bennett advised that it is never too early to ask for a meeting. If your concerns are factual, you may want to wait until a record is developed to enhance the discussion. On the other hand, if the issue is purely one of legal interpretation, there’s no need to wait. And strongly consider bringing your businesspeople to a meeting to discuss substance—Bennett suggested that having them available makes a meeting more productive, and he promised not to turn the meeting into an OTR. Bennett also said that he has had meetings for which lawyers traveled across the country just to tell him that he or his staff are being unreasonable. These, he counseled, are not productive meetings.
So, the apparent takeaway here is that FINRA’s Enforcement Chief wants to hear from you. There was a time when such meetings were a productive tool in managing enforcement investigations to get to the right result. If Brad Bennett wants to lead a rehabilitation of that process, we’re all for that.