What Triggers a FINRA or SEC investigation? - Transcript

So there are a number of things that trigger a finra or an SEC investigation the biggest one is likely a customer complaint or arbitration once a customer complaint is filed it goes on somebody’s u5 Regulators look at u5s whenever there’s what we call a ding on a u5 a mark and so if there’s some negative comments on a u5 about a customer complaint an investigation may start and it may not be limited just to that client every time an arbitration is filed at finra DIS finra dispute resolution finra regulatory the other arm of finra will review the arbitration that is filed to see whether there’s something to it that should be investigated whether maybe other customers are also harmed by it the SEC also gets tips through its whistleblower program and sometimes investigations are started through whistleblower tips and and if they think that it’s more of a thin rich issue they’re going to send it to finra there are sometimes marks on people’s u5 as a result of an employment termination that will start um a federal investigation or an SEC investigation as would a sweep in the industry sometimes Regulators think that there’s a sort of wrongful practice going across many firms a recent example of that is all the firms were investigated about broker’s use of the WhatsApp the problem being that those could not be maintained by a broker dealer because they disappear those WhatsApp messages and so that became a books and Records violation so that started a huge sweep that affected many many firms and many many investment professionals.