The Financial Industry Regulatory Authority (FINRA) adopted several new rule changes, many of which specifically target firms with a significant history of misconduct. As one such rule, Rule 9561, takes effect, it’s important to understand how these changes may affect brokerage firms and financial advisors. Below is a brief overview of FINRA Rule 9561 and how it could impact your professional reputation and future.
Understanding FINRA Rule 9561
When FINRA established new Rule 4111, it also created Rule 9561. Rule 4111 allows FINRA to impose new obligations on broker-dealers demonstrating a history of misconduct. This rule creates a multi-step process wherein FINRA will assess various firms to determine whether they should be considered a “Restricted Firm” and thus subject to additional penalties, such as paying a “Restricted Deposit Requirement.” Rule 9561, also called “Procedures for Regulating Activities Under Rule 4111,” establishes a new expedited process for member firms, allowing them to request a prompt review of FINRA’s determinations under 4111. They may also challenge any of the Rule 4111 requirements, including contesting the Restricted Deposit Requirements. However, Rule 9561 also allows FINRA to address a member firms’ failure to comply with any requirements imposed by Rule 4111.
Requesting a Hearing Under FINRA Rule 9561
Should a member firm decide to challenge Rule 4111 requirements, it can request a hearing. At this point, the hearing becomes subject to Rule 9559, which has also undergone many updates and changes. These revisions establish the authority of the Hearing Officer, clarify timing requirements for such hearings, and directly address the obligations that may be imposed under Rule 4111. These revisions and updates can be challenging to navigate, so we recommend that you enlist the assistance of an experienced securities law attorney to determine the most strategic path forward.
Understanding Your Rights and Defending Your Reputation
With all of these new rules and updates, brokerage firms and financial advisors may feel overwhelmed—especially if FINRA designates them as a Restricted Firm and saddles them with several new obligations. However, it’s important to recognize that you do not have to go through this stressful time alone. Reach out to a trusted securities law attorney to understand your situation and identify the best strategy for obtaining a favorable outcome. Together, you can move forward with greater confidence and certainty.
Call Judex Law, LLC, today at (303) 523-4022 to discuss your concerns with an experienced and dedicated securities law attorney.