Riddle of the FINRA Sphinx
Into week six of working from home. Thankful to my wife for putting up with me and my little doggie for getting me on my feet to play. Aside from my wife and doggie, I have had no in-person contact with anyone, waving at delivery people through the glass. I pray they all stay safe. I pray we all stay safe.
I have traveled a long road in this crazy business, 36 years and counting, and I am now transitioning from being an owner to an employee of a Small Broker/Dealer. Nevertheless, I continue to pursue a path of equality for Small Broker/Dealers in this ever-changing, getting more and more restrictive, regulatory environment. That being said, my comments here are merely my views and not necessarily those of any organization with which I am affiliated.
Doesn't it seem to you that our "regulators" never go all-the-way when they hold out the carrot of regulatory relief? It does to me.
We are fed rhetoric from both sides of the aisle about how important small business is to our Nation's economy yet rule after rule drives a stake into the heart of our Small Firm Community.
It has come to my attention that some FINRA Staff have been "demanding" that Rule 8210 On The Record interviews (OTRs) be conducted by ZOOM or teleconferencing during the COVID-19 pandemic. Those subject to the Staff's OTR demand are being told that they must cooperate and agree to a scheduled ZOOM interview even if the witness and his/her attorney are unable to conduct the interview while both are in the same room.
Who cares that an associated person took ill with the virus, spent weeks in isolation, and is now told that they may be cited for a "Rule" violation for not being able to appear for an OTR or comply with demands for document production? I care! You should care, too!
FINRA Staff does not seem to be concerned that ZOOM or any teleconferenced OTR may result in the creation of an inaccurate transcript by a court reporter, who is most likely trying to do her/his job from a remote location as well.
So, here we are, employees and owners of small firms, all of us in almost total lock-down. FINRA examiners, also working at home in lock-down too, but seem to have too much time on their hands. Those examiners appear to be bored and not being able to gossip around the water cooler, insist on scheduling examinations and hearings, and demanding document production. It is clear that we in the small firm community are largely unable to comply. Have Staff forgotten the reason they're working from home? Just in case, remember "Social Distancing?"
I don't want to point a finger but, in a call to FINRA to get clarification of the need to conduct an OTR in spite of being ordered to Shelter In Place, I was told that "Due Process" must not be postponed in order to keep the adjudicatory process moving. That didn't make any sense to me. I thought Due Process was meant to protect me and associated persons from the bullying of regulators. How is it that FINRA is claiming that Due Process means that they have the right to force folks working from home to take part in hours of OTR or provide documents from home? Maybe FINRA is just trying to find ways to keep its employees busy.
It seems like such a contradiction when both FINRA and the SEC have postponed exams and eased other rules, at least for the time being. So why not add Rule 8210 OTRs to the mix?
Why the draconian insistence to bully respondents to part with what few rights they have in this regulatory process for fear of further rule violations?
We all know that there are local, state, and federal directives against non-essential public transport and in favor of social distancing if not "lock downs." It seems ill-advised, if not illegal, for witnesses to travel to their lawyers' offices, or for the lawyer to travel to a witness's home, as FINRA itself has noted: https://www.finra.org/rules-guidance/key-topics/covid-19/shelter-in-place.
I was also told that they were only pushing ahead with "serious violations." Coronavirus, has brought the world to its knees, not making any distinction of race, religion, political affiliation, anything, yet to the Regulators, it's business as usual, unempathetic, forging ahead, leaving a path of destruction in their wake. Does that not trump (no pun intended) Due Process in this instance?
So, in an attempt to move Due Process along, to "help" complainants and respondents comply, it seems the medium of choice is Zoom. I can't imagine being called to any video interview or hearing, where the fate of my business and career is examined without my attorney and me being at the same table as our accusers. How am I supposed to obtain legal counsel if my attorney and me can't even meet at his office and review documents together or prepare for my testimony?
Here are three articles, of many, that tell me not to attend Zoom video webinars, at least during the coronavirus pandemic, due to cybersecurity and other concerns:
So, I guess the "Riddle of the Sphinx" is now "Who's Examining the Examiners?"
If you have any questions, please do not hesitate in calling or writing.
Best and Stay Safe.
ABOUT THE AUTHOR
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Stephen Kohn has been employed in the financial services industry since 1984. In 1996, he founded FINRA member firm, Stephen A. Kohn & Associates, Ltd. ("SAKL") On January 2, 2020, he passed ownership of SAKL to DMK Advisor Group, Inc. ("DMK"), still a small, Independent broker/dealer, catering to the needs of forty-five independent representatives and their clients, with office locations in seven states, registered in forty and Puerto Rico. He continues to act in the capacity of President and CCO of DMK.
Mr. Kohn holds Series 7, 24, 53, 63, 72, 73, 79 and 99 registrations. He has the honor of having been elected to the FINRA Board of Governors in 2017, representing the Small Broker/Dealer Community. He was also twice elected to the National Adjudicatory Council ("NAC") in 2009 and 2014. Mr. Kohn serves as an Industry Arbitrator and has been elected to the District 3 Committee.
Mr. Kohn graduated from C.W. Post College in 1964 with a BA degree. He has the distinction of having served in the United States Coast Guard.
Well known to those in the NASD and now FINRA small-firm community as a passionate and persistent advocate for small broker/dealers, who comprise more than 90% of FINRA membership, Mr. Kohn continues to speak out on behalf of his industry constituents and colleagues. He intends to remain active in the FINRA reform movement and urges all like-minded industry participants to reach out to him in full confidence concerning any and all matters.
NOTE: The views expressed in this Guest Blog are those of the author and do not necessarily reflect those of BrokeAndBroker.com Blog.