Whenever firms and individuals are faced with SEC and FINRA investigations and enforcement actions, the question is raised about whether it is better to settle or litigate. For the past several years, Sutherland Asbill & Brennan LLP (Sutherland) has conducted studies analyzing this issue. This year's study shows that it sometimes pays to litigate, rather than to settle.
Many BDs, registered representatives and associated persons fear litigating against regulators because the staff has often spent months or even years investigating the conduct. The SEC and FINRA are well-funded, with their own procedural rules, and an employee of the regulator serves as a judge. Respondents fear that “the house that the regulators built”1 gives the SEC and FINRA a home field advantage. However, the Sutherland studies have shown that it sometimes pays for BDs and individuals to litigate, rather than settle.
Both the SEC and FINRA have jurisdiction to bring enforcement cases against BDs, registered representatives and associated persons. FINRA was created in July 2007 through the consolidation of NASD and NYSE Member Regulation. According to FINRA, it oversees approximately 4,500 brokerage firms and approximately 630,000 registered representatives.
Please see full publication below for more information.
