While employed at my prior broker-dealer, I allowed a husband to sign a form on behalf of his housebound wife with her knowledge and approval. Unfortunately, I only had verbal authorization from the wife allowing her husband to sign on her behalf, so while it seemed a relatively minor issue and no one was harmed, it resulted in my termination. FINRA originally asked me to write a response, which I did. I heard nothing further and thought it was over with. It is now over a year after I sent my written response and FINRA has written to ask me to come in for an on-the-record interview. Is it normal to be called in for an OTR after so much time has passed?

FINRA Rule 8210 (Provision of Information and Testimony and Inspection and Copying of Books) confers on FINRA staff the authority to compel a member, person associated with a member, or other person over whom FINRA has jurisdiction to produce documents, provide testimony or supply written responses or electronic data in connection with an investigation, complaint, examination or adjudicatory proceeding. The rule applies to all members, associated persons and other persons over which FINRA has jurisdiction, including former associated persons subject to FINRA’s jurisdiction (i.e., those who haven’t registered with a new brokerage firm within two years after leaving the previous broker-dealer). But a 13-month delay between an 8210 written submission and a proposed 8210 on-the-record interview is not typical. FINRA may have lost your file or something else may have come up of which you are unaware. I would urge you to retain a lawyer and have the lawyer obtain at least a 30-day extension of the OTR so you have time to look into this further. FINRA will usually grant an extension on a first request as long as no client funds are at risk or there’s no other “emergency” involved.

My former brokerage firm forced me to resign when it was going through some financial problems. When the firm terminated me, I was given an agreement to sign saying I waived all claims against them. In exchange, the agreement in essence said, I would get a clean U5 and six months’ salary. It seemed to me that the “clean U5” offer was a veiled threat to mark up my U5 if I didn’t sign. I’ve had a clean record and my termination had nothing to do with any regulatory or compliance issues. Subsequent to my resignation, a large deal closed that I was instrumental in putting together. I feel I’m entitled to the commission on it, but the firm has refused to pay me. Would the firm’s implied threat be enough to void the agreement?

Under Article V, Section 3 of the FINRA By-Laws (see FINRA Notice to Members 10-39), member firms are required to file a true, accurate and complete Form U5. FINRA has stated, “A firm may not parse through the questions in a manner that would allow the firm to avoid responding affirmatively to a question…with respect to factual situations that would cause a reasonable person to answer affirmatively.”

In other words, FINRA doesn’t want firms playing semantics with the wording of the questions on the U4 and U5. Similarly, FINRA takes a dim view of “negotiated” language on a U5. So, depending on how overt the “threat” was in your agreement, you might have a point. On the other hand, an arbitration panel might focus on the fact that you knowingly waived your right to additional compensation in exchange for the six months’ salary. You need to speak with an experienced attorney who can advise you as to the best course of action.

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