What is a FINRA Acceptance, Waiver, and Consent (AWC)? - Transcript

A FINRA Acceptance, Waiver, and Consent (AWC) is a settlement agreement between the Financial Industry Regulatory Authority (FINRA) and an individual or firm under investigation. This process allows parties to resolve alleged violations without admitting guilt but also without disputing the findings. At Malecki Law, we help clients navigate AWCs, ensuring their rights are protected and guiding them toward the best possible resolution.

An AWC is a formal document outlining:

• Acceptance of Facts: The individual or firm agrees to certain stipulated facts about the alleged violations.
• Waiver of a Hearing: By signing an AWC, the party waives their right to a disciplinary hearing before FINRA.
• Consent to Penalties: The agreement specifies the sanctions imposed, such as fines, suspensions, or other disciplinary actions.

While an AWC allows parties to avoid admitting fault, it also prohibits them from denying the findings when dealing with FINRA or other regulatory bodies. However, this limitation typically does not extend to litigation or disputes with third parties, such as customers.

AWCs serve as a streamlined method for resolving regulatory matters that might otherwise progress to a formal complaint and disciplinary hearing. They are commonly used in cases involving:

• Violations of FINRA rules or federal securities laws.
• Failures in supervision or compliance.
• Misrepresentations or omissions in dealing with investors.

For FINRA, AWCs offer an efficient way to enforce rules and address violations without the time and expense of a full hearing. For individuals or firms, an AWC can reduce the uncertainty, costs, and reputational risks associated with prolonged regulatory proceedings.

The specific terms of an AWC vary based on the nature of the alleged violations and the outcomes of FINRA’s investigation. Typical components include:

• Stipulated Facts: A summary of the findings that both parties agree to as part of the settlement.
• Sanctions: Penalties such as monetary fines, suspensions, or requirements for remedial actions like additional training or compliance reforms.
• No Admission of Guilt: In many cases, the party does not admit to the allegations but agrees not to dispute the findings with FINRA or the SEC.
• Binding Nature: By signing the AWC, the party agrees to be bound by its terms and forgoes further appeal.

At Malecki Law, we carefully review AWCs to ensure our clients fully understand the terms and implications before proceeding.

Signing an AWC has significant consequences, including:

• Regulatory Record: The agreement becomes part of the individual’s or firm’s permanent regulatory record, visible on FINRA’s BrokerCheck system.
• Impact on Reputation: Even without admitting fault, the presence of an AWC can raise questions about the party’s compliance practices.
• Legal Limitations: While an AWC restricts denials in regulatory contexts, it may still allow the party to contest the findings in civil litigation or arbitration proceedings.

Given these implications, it is critical to approach AWCs with caution and seek experienced legal counsel to evaluate the risks and benefits.

FINRA investigations and AWCs involve complex rules and significant potential consequences. Engaging legal counsel ensures that you:

• Understand the Allegations: We help you assess the validity of FINRA’s claims and the evidence supporting them.
• Evaluate Options: Whether negotiating an AWC or preparing for a hearing, we guide you toward the best course of action for your specific situation.
• Negotiate Favorable Terms: Our team works to minimize penalties and protect your professional reputation.

At Malecki Law, we have extensive experience representing clients in FINRA matters, including navigating AWCs and their implications.

If you are dealing with a FINRA investigation or considering an Acceptance, Waiver, and Consent agreement, Malecki Law can help. Our experienced securities attorneys provide strategic advice and strong representation to protect your interests and achieve the best possible outcome. If you have questions for an experienced securities lawyer, reach out to Malecki Law to schedule a free consultation by calling 212-943-1233. We value your privacy and will ensure all communications remain confidential. Malecki Law is based in New York and represents clients across the world.

Transcript:

A FINRA AWC is an acceptance of certain stipulated facts a waiver of a hearing and a consent to a penalty essentially it is a settlement with FINRA and as with the SEC with FINRA sometimes you’re allowed to neither admit nor deny the allegations in the settlement meaning you don’t have to say I admit these things happened and then that would be used in other proceedings but you can’t deny it so you can’t say that never happened unless it is in a perceiving a litigation let’s say with a customer you can deny it you just can’t deny it when it comes to the SEC or to FINRA and AWC is essentially the way that FINRA and similarly the SEC structure settlements of regulatory matters that have been investigated and are moving into the complaint phase or have already moved into the complaint phase.