Every year FINRA sends hundreds of inquiries to firms that are not broker-dealers, including RIA firms, about suspicious trading. In such instances, FINRA likely has no authority to require the firms or directors of those firms who receive these letters to provide the information requested. Nevertheless, if you receive such a request, you will undoubtedly want to know why you received it and what, if anything, you should do to respond.
These inquiries are a systematic part of FINRA’s mandate to uncover insider trading. As such, you should not presume that you, your staff, or your clients did anything wrong. Conversely, you should avoid the risky presumption that the inquiry is merely routine. Most non broker-dealers voluntarily provide the information requested by FINRA. This article will explain the process and the issues you or your firm should consider in determining whether and how to respond.
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