“FINRA Defendants” can have slightly different meanings depending on whether the Financial Industry Regulatory Authority (“FINRA”) is conducting an investigation or whether it has instituted formal disciplinary proceedings against a person or company.

FINRA is not an agency of the United States Government. It is technically a private organization, or a “self-regulatory organization” (an “SRO”), but it operates with powers delegated to it by the U.S. Securities and Exchange Commission. FINRA does not have jurisdiction over everyone; it only has authority over securities firms doing business in the United States that are Members of FINRA and “associated persons”, such as registered representatives working for those securities firms.

When FINRA is conducting an investigation it usually believes, based on evidence available to it at the time, that a fraud or other securities violation may have occurred. While FINRA sometimes may not be willing to use the term “target”, that term is often used by people outside of FINRA. “Target” is usually used to refer to someone who FINRA likely thinks actually did commit a fraud or securities violation, based on information that FINRA has at the time. Over the course of a FINRA investigation, someone who FINRA initially believes may be just a witness may come to be viewed as a “target”. Likewise, over the course of a FINRA investigation, someone who FINRA initially believes may be a potential “target” may come to be viewed as just an innocent witness. Again, sometimes FINRA may not be willing to use these terms, and may instead simply refer to someone as a “witness” if anything. During an investigation, sometimes people outside of FINRA will refer to a “target” of the investigation as a “FINRA defendant” in the investigation.

If FINRA brings a formal case against a person or company, it brings that case in an administrative proceeding instead of a lawsuit in court. Often this administrative proceeding is called a “disciplinary hearing”. Generally speaking, a FINRA disciplinary hearing is somewhat similar to a lawsuit, excpet that it has its own rules and will usually be decided by a panel of three disciplinary hearing officers instead of by a court judge or a jury. A person or company that FINRA is suing in a disciplinary hearing is also referred to as a “FINRA respondent” or a “FINRA defendant”.

If you would like information about The Pickholz Law Offices’ experience representing FINRA Defendants, or those who believe that they may become a FINRA Defendant, please feel free to click on the “Sample Matters” link and the other links on the right side of this page.

 

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