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Audits & Regulatory Investigations
Our New York audits and investigations attorneys offer strategic legal defense to individuals and entities who are being investigated, subpoenaed and/or charged by FINRA, the SEC, the U.S. Attorney’s office, state securities regulators, and other exchanges.
Being the subject of a regulatory investigation can be a life-altering experience. The magnitude of potential penalties may include substantial fines, losing your license, or even criminal charges. It can even influence your future employment in the securities industry as well as other industries too. Having experienced audits and investigations counsel representing you and protecting your rights may be the key to an outcome in your favor.
It is important to be properly prepared for responses to inquiries and subpoenas. Early intervention by an attorney can avoid unnecessary issues and prolonged proceedings.
Malecki Law represents clients at each stage of the regulatory and self-regulatory process — from an informal inquiry, through contested hearings (including on-the-record testimony and the “Wells” process), as well as on appeal. We assist clients through:
- Obtaining "No-Action Letters" i.e., a complete defense with no reporting on your license
- Negotiation of favorable regulatory settlements to minimize sanctions, generally known as AWCs (Acceptance, Waiver and Consent)
- Fully litigated hearings before regulators, self-regulatory organizations, government agencies, and criminal proceedings
- Formally responding to Regulatory Inquiries, Investigations, Exams & Audits, including On-the-Record Interviews, Document and Information Requests, and Subpoenas
- Review and Creation of Compliance / Supervision Directives and Procedure
- Membership & Registration Continuation Proceedings
Malecki Law has represented brokers, investment advisors, supervisors, compliance professionals, structured finance professionals, analysts, CFOs, CEOs, COOs, and others who fall under the watch of the Financial Industry Regulatory Authority (FINRA), the United States Securities and Exchange Commission (SEC), the U.S. Attorney’s office, state securities regulators, and other exchanges.
For over 20 years, New York securities audit and investigation lawyer Jenice Malecki and her team at Malecki Law has assisted various types of industry professionals and firms in formal and informal civil, criminal, regulatory and enforcement actions, investigations, audits, and proceedings initiated by the SEC, FINRA, NASD, NYSE, AMEX, federal prosecutors, state attorneys general, and other regulatory and self-regulatory agencies.FINRA Investigations
One of FINRA’s top priorities is to advance investor confidence in the securities markets through vigorous enforcement of federal securities laws. FINRA has the authority to fine, suspend or bar brokers and firms from the industry. FINRA may initiate investigations from many varied sources, including examination findings, filings made with FINRA, customer complaints, anonymous tips, automated surveillance reports, and referrals from other regulators or other FINRA departments, among others.
As of 2019, FINRA has almost 625,000 registered members and 3500 registered securities firms, all of whom it is responsible for regulating and overseeing for compliance. In doing so, in 2019, FINRA gave out over $39.5 million in fines and $27.9 million in restitution. The agency also barred almost 350 individuals and expelled 6 firms and suspended over 400 other individuals and over 20 firms. In addition, FINRA referred more than 800 fraud and insider trading cases to the SEC and other agencies for litigation and/or prosecution.
In 2016, the Department of Labor introduced new tougher regulations holding brokers and insurance agents to strict “fiduciary” standards. And just last year the SEC adopted Regulation Best Interest under the Securities Exchange Act of 1934. Regulation BI, which is slated to take the place of Suitability, will establish a standard of conduct for all brokers, broker-dealers, and associates regarding recommendations they make to customers. As the regulations of the securities industry become more demanding, so has the scrutiny of securities professionals and the need for regulatory defense and other proceedings.SEC Investigations
According to the SEC’s 2019 annual report in which it outlines its efforts on behalf of investors, the SEC brought a record 862 cases, which were composed of 526 independent actions and 336 actions against issuers that were delinquent in making required filings or “follow on” administrative proceedings (as reported by the SEC). These SEC actions resulted in a record total of monetary sanctions being imposed against defendants and respondents. In the fiscal year of 2019, the SEC obtained orders requiring the payment of $4.349 billion in penalties and disgorgement, which is a record for the Commission.
Common violations that may lead to investigations include:
- FINRA or SEC rule violations
- Misrepresentation or omission of important information about securities
- Manipulating the market prices of securities
- Stealing customers' funds or securities
- Violating broker-dealers' responsibility to treat customers fairly
- Insider trading (violating a trust relationship by trading on material, non-public information about a security)
- Selling unregistered securities