We regularly represent investment professionals and other licensed individuals in investigations or enforcement actions initiated by regulatory agencies. We have handled FINRA investigations relating to unauthorized trading, failure to perform due diligence, failure to disclose, lack of supervision, excessive markups, best execution, and regularity complaints resulting from customer arbitrations or litigation. We have handled dozens of such investigations, and are asked to handle particularly sensitive matters when our clients believe an investigation may be initiated. We also handle SEC matters relating to similar conduct, including SEC actions convened against RIA firms resulting from either annual audits or specific areas of regulatory emphasis. We know the regulatory process, potential pit falls, and how to navigate such matters, particularly when there is pending or potential litigation that may arise out of the same alleged conduct. We recognize that these types of investigations or inquiries carry significant risk, that often goes beyond simply financial risk, and we handle such matters with a particular sensitivity to those concerns. This area is a specialized one, and we have a breadth of knowledge and expertise that comes from significant experience handling such matters.
In addition to regulatory defense, we also provide regulatory counseling services for broker dealers and investment advisors who are newly formed or who are moving into new business areas in the financial services arena. We are experienced in preparing compliance procedures, in counseling clients experiencing challenges in the regulatory examination process, in assisting in new member applications and changes in broker dealer memberships and similar matters.
Recent Successes
Represented two brokers in a year-long FINRA and California Department of Corporations investigation arising out of the sale of mutual funds. After extensive investigation, interviews and on-site record examinations, the investigation concluded with a finding that there was no evidence of regulatory wrongdoing.
Defended national broker-dealer against claims filed by the SEC related to market making and bond sales. Negotiated settlement with the SEC on terms favorable to our client.
Represented independent broker-dealer being investigated by the SEC for alleged failure to perform due diligence of products and failure to follow established procedures. Pursuant to extensive inquiry, SEC took no action and closed the examination.
Represented broker-dealer in multi-year FINRA investigation initiated by the Market Regulation division relating to municipal bond transactions over a multi-year period. After months of negotiations, the charges were settled on very favorable terms for our client, and no individuals were censured or fined as a result of the settlement.
In addition to the above, many of our successes resulted in investigations which resulted in no action being taken against our clients. In dozens of such matters, we have proactively shared information with the regulator body, explained our clients’ conduct, taken proactive remedial measures where warranted, or aggressively argued that contemplated charges or findings are unwarranted. In such matters, the agency simply took no action.
We have represented investment advisors in matters initiated by the SEC. We have handled significant dollar amount regulatory actions alleging violations of Sections 206, 207 of the Advisors Act and Section 15 of the Investment Company Act. We have significant experience relating to alleged undisclosed conflicts of interest, mutual fund disclosures, undisclosed fee arrangements, inadequate Form ADV claims, and other alleged violations relating to RIA conduct. In these types of cases including conflicts of interest, we immediately assess the focus and scope of the investigation to determine if the purported violation exists, and determine the tenor of the investigation to determine if the SEC is focused on just the issues raised in the investigation, or if the investigation or complaint implicates larger enforcement goals. Based on this assessment, we determine if early settlement is appropriate or if the matter must play itself out to hearing. Normally these cases settle, but often advisors must be prepared to defend themselves through hearing if they want to achieve the best results.