The more complex registration problems involve "statutory disqualifications" for a variety of events. Once one becomes aware of a statutory disqualifying event, the FINRA member firm is obligated to report the event to FINRA and cease its association with the disqualified person unless and until that person is approved for continued registration in an Eligibility Proceeding. If the event occurs while the associated person is currently registered and working with the member firm, the person may be permitted to continue to work under certain circumstances, provided the member firm promptly files a written application for the associate person to continue his or her employment during the course of the Eligibility Proceeding. The same rule applies to member firms that become the subject of a statutory disqualification event.Let Attorney Pearce Guide You through Disqualification/Eligibility Proceedings
This is a very technical proceeding and requires a skilled trial lawyer with detailed knowledge of FINRA practices and procedures. Attorney Pearce at the Law Offices of Robert Wayne Pearce, P.A. has substantial knowledge and experience in this area of law and regulation.
The first step is for the member firm or its lawyers to amend the associate's Form U-4 and complete and file a detailed application to initiate the Eligibility Proceeding. If the member is the subject of this disqualifying event, than it must amend its Form BD and file the application on its own behalf as well. The FINRA Registration and Disclosure division then examines the application for deficiencies. It compiles all the documents necessary for Member Regulation and the Office of General Counsel to review and consider.
The Member Regulation division acts as the party for FINRA in all Eligibility Proceedings. It is responsible for evaluating all of the applications and making recommendations to the National Adjudicatory Counsel. The important factors in considering whether to grant or deny the application for continued eligibility as a member or associate member of any firm are as follows:
The nature and gravity of the disqualifying event.
The length of time that has elapsed since the disqualifying event.
Whether any intervening misconduct has occurred.
Any other mitigating or aggravating circumstances that may exist.
The precise nature of the securities-related activities proposed in the application.
The disciplinary history and industry experience of both the member firm and the firm proposed by the firm to serve as a responsible supervisor of the disqualified person.
These applications are generally not approved without the member firm undertaking to perform heightened supervision of the person who is subject to disqualification. Virtually every application that is approved requires the implementation of the special supervisory plan.
The next step is the actual Eligibility Proceedings hearing, which are scheduled throughout the year and held in Washington DC. It is a formal hearing where everyone is afforded the opportunity to be heard, present evidence, and be represented by attorneys to argue in favor of their position. The Member Regulation division is represented by a FINRA staff attorney who advocates the recommendation that the application be granted or denied.
Although the decision at FINRA is ultimately made by the National Adjudicatory Council, the Statutory Disqualification Committee actually makes the recommendation based upon the record in the Eligibility Proceeding and steers the decision of the Council. In rare instances, its decision is the final step at FINRA unless the FINRA Board of Governors intervenes and seeks to review the decision to assure itself that the admission of the disqualified person or member is not inconsistent with the public interest and the overriding regulatory goal to ensure the protection of investors.
The very final step in this regulatory process is review of the FINRA decision by the U.S. Securities and Exchange Commission (SEC). The SEC must review and approve every FINRA decision before it takes effect. It usually is a rubber stamp approval, but on occasion the SEC may scrutinize a particular application by requesting more information, requiring more restrictions, or requiring more undertakings on behalf of the member firm and its supervision of the disqualified person. Similarly, if FINRA denied the application, the aggrieved person is entitled to an appeal to the SEC for the relief of the "statutory disqualification" requested.Free Initial Consultation With Attorneys Who Can Handle Your FINRA Eligibility Problems
The Law Offices of Robert Wayne Pearce, P.A. understands what is at stake in securities industry Eligibility Proceedings and constantly strives to secure the most favorable possible result. Mr. Pearce provides a complete review of your case and fully explains your legal options. The firm works to ensure that you have all of the information necessary to make a sound decision before any action is taken in your case.
For dedicated representation by a law firm with substantial experience in all kinds of securities, commodities and investment industry registration disputes, contact the firm by telephone at 561-338-0037 or toll free at 800-732-2889 or via e-mail. We may also be able to arrange a meeting with you at offices located in Boca Raton, Fort Lauderdale, Miami, and West Palm Beach, Florida and elsewhere.