Termination Do's and Don'ts - U5 Filings, Responding to Rule 8210 Enforcement Letters

We often receive calls from registered representatives who were recently terminated for cause. Being terminated is a stressful situation which often leads many to act irrationally and not think clearly as to what they must do to prevent further damage to their career. 

What kind of damage could a termination in the brokerage industry  cause? Unlike other industries, the securities industry is highly regulated by FINRA. Everything is reported to FINRA and depending on what is reported it can mean the difference between not only having incorrect falsehoods on your Brokercheck for the rest of your career, but also being the subject of a lengthy FINRA Enforcement investigation, while at the same time trying to find a new job - not a pleasant circumstance to be in. Further, firms are known to exaggerate the reasons behind the termination whether intentionally, so as to try to keep the representative's clients, or simply due to laziness and having no one questioning the verbiage they choose to use or what disclosures are checked off in response to item 7F of Form U5 . What the firm chooses to write can makes all the difference to their future in the industry and impact their immediate income.

DO TRY TO KEEP ANY EMAILS, TEXTS, WITNESS NAMES, OR OTHER EVIDENCE WHICH MAY ASSIST YOU IN DISPUTING THE FIRM'S VERSION OF TERMINATION, IF NOT ACCURATE - any such evidence could be critical to convincing the firm to alter the language they propose to include in the U5 and/or dissuade FINRA from taking enforcement action. 

DO CALL AN ATTORNEY IMMEDIATELY UPON TERMINATION - If the representative is on the ball and they engage a qualified and experienced FINRA attorney as soon as they are terminated, often times significant expense, damage and stress can be avoided. Firm's have 30 days from the date of termination for which to file the Form U5 so it is critical to act quickly as firms are more likely to make changes before they file the U5 than after. We have successfully engaged with both large and small firms so as to determine what language will be submitted as to the reason for the termination as well as what the firm's responses to question 7F  (violation of investment related statutes, regulations, rules or industry standards, fraud or wrongful taking of property, etc) will be.  When called early on in the process, we have on numerous occasions been successful in convincing the firm to remove affirmative responses to 7F and modifying and toning down the language for termination, pointing out inaccuracies of such language based on the evidence with the threat of a future significant potential defamation claim. As a result, countless representatives have avoided FINRA enforcement proceedings which could lead to sanctions, suspension or a bar, and many have avoided marks on their Brokercheck records impacting their ability to obtain new employment and clients. In addition, typically by engaging counsel early on in such fashion, many thousands of dollars is saved from having to defend against a FINRA enforcement proceeding and potential customer claims that could be triggered by the Brokercheck mark. Nothing entices Claimants' attorneys more in filing claims than marks on one's CRD. 

DO NOT ENGAGE YOUR PRIOR FIRM DIRECTLY - While you may think you can engage with the firm directly and save some money, such actions are foolish as you will only make life more difficult for any attorney you later retain to try to engage them as you would have made additional statements impacting their ability to alter the U5

DO CALL AN ATTORNEY IMMEDIATELY UPON RECEIVING A FINRA 8210 LETTER AND DON'T RESPOND ON YOUR OWN - If one happens to receive an 8210 letter from FINRA, once again it is important to retain a qualified FINRA attorney as soon as possible, so as to engage with FINRA before the representative gives any statement oral or otherwise. Those determined to handle such matters on their own soon learn that they were penny wise and pound foolish, as FINRA doesn't really care about apologies or the " I didnt know" defense. By engaging an experienced FINRA attorney early on in the process, who knows what FINRA does care about, it allows the lawyer to assess the situation and present the best defense possible, knowing what FINRA would need to prove based on the accusations at issue. However, it is much harder to properly defend someone who makes numerous statements to FINRA, effectively locking themselves in, or worse attending an OTR (On the Record) interview without counsel.   

If you follow the above guidance, it is much more likely that your termination will be a simple bump in the road, with no impact on obtaining a new position and no impact on your CRD. Further, if there is a FINRA investigation a FINRA lawyer will assist in seeing that it ends fairly quickly with perhaps as little as a simple non-reported FINRA letter of caution, like one of our recent clients received, after only $2,000 of legal time expended.  It is common knowledge that FINRA looks at pro-se (self represented) broker who is without an experienced FINRA attorney like low hanging fruit waiting to be tarred and feathered - Don't be that low hanging fruit!  


Stuart David Meissner Esq.
Free Phone Consultations 
Nationwide Affordable Representation
Toll Free - 866-764-3100
  
 

    

     
       
    


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