Internal Investigations at a Brokerage or Investment Advisory Firm

Few things can feel as unsettling as being the subject of an internal investigation at your brokerage or investment advisory firm. Whether prompted by a customer complaint, a compliance red flag, or an unexpected inquiry, these investigations have the potential to impact your career and reputation profoundly. Malecki Law is a leading name in securities law that provides guidance to financial professionals who are subject to an internal investigation. We understand the complexities of these situations and are prepared to offer you the support you need to protect your future. Knowing what to expect and how to respond can make all the difference.

Brokerage and investment advisory firms are required by FINRA to implement policies and procedures designed to ensure compliance with securities laws. Supervisors and compliance officers are typically responsible for enforcing these policies and conducting investigations when violations are suspected. These professionals investigate potential breaches of securities regulations or firm policies, working to identify misconduct and address it effectively. The firm’s legal team may also be involved, particularly when the potential misconduct has significant implications.

Internal investigations are triggered by a variety of factors, often tied to the firm’s compliance systems designed to detect "red flags." Red flags may include unusual trading activity, customer complaints, or inconsistencies in documentation. Investigations can also arise from whistleblower reports, regulatory inquiries, or complaints from other industry members. Firms are obligated to take these indications seriously and thoroughly investigate to determine whether misconduct has occurred. Depending on the findings, investigations may lead to disciplinary action, changes in supervision, or even termination of the involved party.

Being under investigation by your firm can lead to significant professional and personal stress. At the start of an investigation, you may be placed on administrative leave or restricted from accessing certain accounts or clients. The investigation’s outcome could vary widely based on the findings and can include:

• Return to Work as Usual: If the investigation clears you of wrongdoing, you may resume your normal duties.
• Heightened Supervision: If minor infractions are found, you may be allowed to continue working under additional oversight or with supplemental training.
• Termination: Serious violations could lead to termination and possibly further actions, such as being reported to regulatory bodies.

Regardless of the initial outcome, investigations often leave a mark on your professional record that could impact future employment prospects within the securities industry.

If you learn that your conduct is being investigated, immediately seeking legal representation is imperative. Having an experienced securities attorney, such as those at Malecki Law, can make a critical difference in the outcome of your case. Here are some key steps you should consider:

1. Consult an Attorney: Your firm’s lawyers represent the firm’s interests, not yours. An attorney experienced in securities law can protect your rights and interests throughout the process.
2. Prepare Your Responses Carefully: Written statements and verbal responses should be crafted with care to present your position in the best possible light. An attorney can guide you in avoiding statements that could inadvertently harm your case.
3. Stay Professional: Even under pressure, maintain professionalism in all interactions with compliance officers, investigators, and your colleagues.
4. Document Everything: Keep detailed records of all communications and developments related to the investigation.
5. Follow Legal Advice: Your attorney’s guidance is essential for navigating the complexities of internal investigations.

Having legal counsel ensures you are well-prepared for interviews with compliance officers and firm attorneys, who are focused on protecting the firm rather than advocating for you. Malecki Law’s experienced attorneys provide the strategic advice and representation needed to protect your career and reputation.

Internal investigations are a challenging aspect of working in the securities industry. Malecki Law has a proven track record of assisting brokers, advisors and other financial professionals in effectively navigating these investigations. Whether you need guidance in responding to compliance inquiries or representation during firm-led interviews, our attorneys are here to support you. Contact Malecki Law at (212) 943-1233 to schedule a consultation and take proactive steps to safeguard your career.