State Regulatory Investigations - Transcript

State regulatory investigations often parallel those conducted by FINRA and the SEC, but they are initiated and managed by state-specific authorities. These regulators, such as the New Jersey Bureau of Securities or the New York State Department of Law’s Securities Division, play a crucial role in maintaining compliance within the securities industry. At Malecki Law, we understand the unique challenges posed by state investigations and the importance of protecting your licenses and registrations.

State regulators oversee securities activities within their jurisdiction and enforce compliance with state-specific rules and regulations. Their investigations often arise from:

• Complaints from Investors: State regulators frequently act on complaints filed by individual investors regarding suspected misconduct.
• Parallel Proceedings: If FINRA or the SEC imposes sanctions, state regulators in jurisdictions where you are registered often review these actions and may initiate their own inquiries.
• Routine Audits or Examinations: States conduct regular audits of registered entities to ensure compliance with their rules.

Each state’s regulatory body operates under its own set of rules, which can create additional layers of complexity when multiple states are involved. These rules can vary significantly, making it crucial for professionals to understand the specific requirements of each state where they operate.

One of the most challenging aspects of state regulatory investigations is the potential for parallel proceedings. For instance, a FINRA sanction may prompt state regulators to launch their own inquiries. In such cases, you could face investigations or sanctions from multiple jurisdictions simultaneously.

State regulators often assess whether they should impose additional fines, restrictions, or even revoke your ability to operate within their state. These actions can have a cascading effect, with one state’s decision influencing others. This interconnected oversight underscores the importance of addressing state investigations strategically.

Moreover, the overlapping jurisdiction between states and federal regulators can complicate matters further. For example, a finding by FINRA or the SEC might lead state authorities to reexamine your conduct under their specific statutes, potentially leading to additional penalties or sanctions. This domino effect can quickly escalate, making it essential to approach these proceedings with a well-prepared defense. If you are expecting, or currently the subject of a securities investigation, you should promptly contact a securities attorney, like the experts at Malecki Law in New York.

As with FINRA and SEC investigations, attempting to navigate state regulatory inquiries without experienced legal counsel can be detrimental. Regulators have lawyers of their own, and are well-versed in their procedures and the extent of their authority. Without a skilled attorney, you may:

• Fail to push back against overreaching requests or demands.
• Misinterpret procedural rules, leading to unnecessary complications.
• Miss opportunities to negotiate favorable terms for settlements or sanctions.

State regulators are also limited in how they can engage with unrepresented individuals. Having legal representation ensures you have an advocate who understands how to communicate effectively and advocate for your interests. A knowledgeable attorney can work to narrow the scope of requests and ensure that your responses do not inadvertently expose you to additional liability.

Your ability to work in the securities industry relies heavily on maintaining clean licenses and registrations. State regulatory actions can tarnish your professional record, leading to reputational harm, financial penalties, and loss of employment opportunities. In extreme cases, sanctions from one state can create a domino effect, with other states following suit.

The long-term consequences of state regulatory actions can be severe. Even minor infractions can lead to heightened scrutiny during routine audits or make it more difficult to secure new licenses in additional jurisdictions. Addressing these issues proactively is critical to preserving your career and maintaining the trust of clients and colleagues.

By addressing state investigations proactively and with skilled representation, you can minimize these risks and protect your career. It’s not just about resolving the immediate investigation but also about safeguarding your future in the securities industry.

At Malecki Law, we guide clients through the complexities of state regulatory investigations. Our experienced securities attorneys understand the rules and protocols of various state regulatory bodies and can help you respond appropriately. We negotiate with state regulators to advocate for reduced penalties and protect your licenses, while also building a strong defense by gathering and presenting evidence that supports your case. Beyond resolving the immediate issue, we work with you to implement compliance measures and safeguards to prevent future regulatory challenges.

State regulatory investigations require strategic planning and a deep understanding of the securities industry. Contact Malecki Law at (212) 943-1233 or reach out online to schedule a consultation. Let us help you safeguard your professional future and navigate the challenges of state oversight with confidence.

Transcript:

State investigations are very similar to FINRA and SEC investigations but by a state regulator. They all have different names but they’re like the New Jersey bureau of Securities uh the New York state department of law uh securities division.

There are parallel proceedings and most people don’t really consider this, but if you get fined by FINRA for example state regulators are that you are registered so in states where you’re registered.

Those regulators will usually look at what the FINRA sanction was and then start asking you questions to see if they want to kick you out of their state for one reason or another.

So you can have multiple parallel proceedings so SEC FINRA and estate, the states have their own rules and again as with FINRA and the SEC if you don’t have a lawyer these regulators can’t speak to you and negotiate the way they do with lawyers.

They also know that you don’t know the procedures and you don’t know how to push back on them and you don’t know the limits of their power.

So it’s important to get a skilled state investigations lawyer like Malecki Law to help you through these proceedings to keep your licenses and registrations as clean as humanly possible.