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8 Things You Should ABSOLUTELY Know Before You Go Into A FINRA OTR

You just received a request to appear for an “On the Record interview” (OTR) by FINRA. While feeling anxious is understandable, avoiding common pitfalls takes preparation.

I’m breaking down the eight non-negotiable things to know before your FINRA OTR. Master these insider tips to confidently handle the questions, objections, and, yes, even frustration.

An OTR deposing witnesses plays a key role in FINRA’s investigative process. Heed this hard-won advice so you can effectively represent your interests in the high-stakes proceeding while avoiding self-incrimination.

What is a FINRA OTR Interview?

A FINRA “On the Record interview” (OTR) is a formal meeting with investigators from the Financial Industry Regulatory Authority. As an organization authorized by Congress, FINRA oversees broker-dealers and securities representatives to protect investors.

When FINRA encounters potential violations, they open an examination into the activities of firms or registered representatives. An OTR falls under the investigative process – it is a chance for FINRA enforcement staff to directly ask questions and gather sworn testimony.

Similar to a deposition, an OTR is recorded by a court reporter as part of the official record. The aim of an interview is to clarify issues under review, allow the individual or firm to provide explanatory responses, and ideally resolve matters to prevent further proceedings.

However, OTRs are still serious interrogations with high stakes for your registration and livelihood. Without legal counsel on asserting objections and avoiding self-incrimination, things can go downhill quickly, even for experienced brokers.

Regulations Governing FINRA Interviews

The Securities Exchange Act of 1934 established the foundation for financial industry oversight. Under this Act, FINRA derives authority to create regulatory rules and conduct investigations.

FINRA Rule 8210

Central to the OTR process is FINRA Rule 8210, which grants the power to compel testimony and document production during examinations. This rule requires prompt cooperation with requests or risks automatic sanctions.

FINRA Rule 2010

Registered representatives must comply with FINRA Rule 2010 by observing high commercial ethics standards. Giving false or misleading statements in an OTR setting violates this rule. Additionally, any sworn deception made under Rule 8210 circumvents federal perjury laws.

The SEC approved FINRA’s procedural rules that govern investigations and disciplinary actions. Such considerations as OTR interview notifications, appearance affirmations, transcription reviews, and follow-ups uphold defined due process protocols.

8 Things to Know Going into a FINRA OTR

#1 You Might Not Be The One Under Investigation

FINRA requests OTRs from both persons of interest and witnesses alike. Rather than immediately worrying, “Am I in trouble?” realize you may be there only to provide helpful information or corroborating evidence. Treat it more like a deposition.

#2 Your Statements Get Recorded and Transcribed

A court reporter documents every utterance once you’re sworn in under oath in the recorded session. Take care to avoid the infamous “verbal diarrhea” tendency when responding. Stick to precisely answering the question asked rather than volunteering tangential information.

#3 Format Could Be Virtual or In-Person

FINRA conducts OTR interviews remotely over video platforms or in person. But the circumstances stay the same – recorded, court reporter, sworn testimony. The format makes little difference, so don’t let a virtual setup lull you into casual chatter.

#4 Object on Record To Documents or Questions

Unlike a casual chat, the OTR presents a vital chance to object to any referenced documents or specific questioning on the record. Skilled securities attorneys can assist in making these timely objections to potentially exclude troublesome info from future legal proceedings.

#5 Mentally Prepare for an Endurance Match

Reschedule other appointments and bring healthy snacks. OTRs easily consume entire days, with some extending over multiple long sessions. Know you have the right to request reasonable breaks whenever fatigue sets in, or you feel overwhelmed.

#6 Expect To Get Emotionally Triggered

Even with the best intentions, intimidation tactics or surprise angles can unlock anger and anxiety. Contact your attorney if this occurs, take a walk, and breathe deeply. Have stress-relieving items on hand. It happens to everyone, so don’t beat yourself up.

#7 Curb Your Enthusiasm

When posed a question, pause, truly digest what’s being asked, then respond with JUST the answer needed – nothing more. Rambling endlessly because you’re nervous or misunderstood the inquiry only causes bigger problems. Seek clarification rather than assumptions.

#8 Never Attend An OTR Without An Attorney

Attempting these high-stakes interviews alone is folly, no matter your confidence or experience. Securities attorneys know how to make timely objections, request breaks when appropriate, clarify vague questions, and keep you from self-incrimination.

FINRA OTRs should not be taken lightly. At My RIA Lawyer, our veteran regulatory defense attorneys have witnessed the damage done when participants lack preparation. Now that you know what to expect, contact us before your interview date so we can ready your defense strategy.

Our ex-FINRA regulators on staff can help you master the OTR while avoiding missteps that prompt further investigative woes. We’ve protected countless other brokers and investment advisors through this stressful process. With so much on the line, don’t go it alone.

Contact us to discuss your options.

Author Bio

Leila Shaver is the Founder of My RIA Lawyer, a law firm that provides compliance and legal consulting for financial institutions. With extensive experience as a securities attorney and compliance expert, she has served as Chief Compliance Officer and General Counsel to RIAs, BDs, and TAMPs with billions in assets under management.

Leila understands the challenges RIAs face and is committed to helping RIAs streamline their processes, mitigate risks, and ensure compliance with regulatory requirements. She received her Juris Doctor from Atlanta’s John Marshall Law School and is a West Georgia Young Lawyers’ Association member. Leila has received numerous accolades for her work, including the Carroll County Bar Association’s Outstanding Young Lawyer Award in 2017.

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