According to an article by Jacqueline Bell appearing in Securities Law 360 on February 5, 2009, broker-dealers and registered representatives are often better off fighting charges brought by the SEC and FINRA as opposed to settling with the regulators.
One of the keys to a successful outcome for respondents is the decision to hire counsel. SEC and FINRA respondents who did not hire attorneys never got any charges dismissed, whereas those that hired counsel got 22 percent of charges dismissed before the SEC, and 19 percent of charges dismissed before FINRA. Similarly, firms obtained dismissals 45 percent of the time, compared to merely 8 percent for individuals.
According to the article, even when the SEC or FINRA won the cases, the administrative law judge or other decision maker awarded lower financial sanctions than the regulator had sought. Financial firms and representatives were able to lower the sanctions a whopping 83 percent of the time in cases before the SEC and 50 percent of the time in cases before FINRA.
Not surprisingly, the article that was based on a study conducted by the Sutherland law firm also noted that fraud charges are more difficult for the SEC or FINRA to prove, since the regulators have to prove that the defendant acted with a malicious intent to defraud. The regulators failed to prove fraud in 28 percent of the cases in which fraud was alleged.
Page Perry is an Atlanta-based law firm with an active practice in representing individuals and companies in matters instituted by the SEC and FINRA. For further information, please contact us.