The Broker-Dealer Team at Drinker Biddle provides practical insights on litigation, regulatory, compliance and fiduciary issues impacting broker-dealers and registered investment advisers, who constantly face challenging regulatory requirements and risks. Our clients include national retail brokerage firms as well as smaller regional firms, Registered Investment Advisors (RIAs) and other financial services providers. We handle broker/adviser-customer and broker/adviser-employee litigations and arbitrations, regulatory inquiries, disciplinary hearings and appeals, and counsel on regulatory matters. In addition, we represent clients in an array of employment and ERISA disputes.

Our attorneys are frequently speak and author articles about these issues and the team maintains a blog devoted to Broker-Dealer Regulation & Litigation Insights (www.brokerdealerlawblog.com). We keep our clients informed on Financial Industry Regulatory Authority (FINRA), Securities and Exchange Commission (SEC), Employment Retirement Income Security Act (ERISA) and other related developments, as well as emerging legal issues and strategies.

Broker-Dealers

Arbitrations and Other Customer Litigation

We defend securities brokers in court against claims involving retail sales practices, supervision, market manipulation, trading and marketing strategies, and regulatory compliance, not only in conventional broker-customer disputes, but also in disputes involving CDOs and CMOs, direct investments, “tainted research,” the liabilities of discount and clearing brokers, judicial enforcement of arbitration eligibility rules, court proceedings confirming or vacating arbitration awards, interpleading disputed assets and expungement of brokers’ Central Registration Depository records. In addition, we protect securities industry professionals from expansive liability under securities, racketeering and consumer protection statutes.

We have a long history in this arena. In fact, when arbitration became the accepted means of resolving broker-customer disputes, we were among the first to argue that pre-dispute arbitration agreements should also be honored in cases arising under the federal securities and racketeering laws, and under ERISA, ADEA and Title VII.

Broker/Adviser-Customer Arbitrations

We handle FINRA arbitrations for broker-dealers and individual brokers in a streamlined and cost-effective manner. We handle American Arbitration Association (AAA), Judicial Arbitration and Mediation Services (JAMS) and, where appropriate, FINRA arbitrations for registered investment advisers.  Members of the team have served as in-house counsel at brokerage firms and recognize the importance of open communication, early risk evaluation, efficient budgeting and staffing commensurate with the complexity and exposure of each case. Even those brokerage firms that generally handle matters in-house engage us when exposures are high or separate representation for a current or former employee is needed, or when busy dockets result in overflow work that cannot be handled in-house. We have handled more than 300 litigation matters since the McMahon decision.

Employment Disputes

We regularly represent financial service employers in a wide variety of litigations involving single and multiple plaintiffs, class, collective and other representative actions in both state and federal courts across the country. In addition, we have a robust practice defending broker-dealers in employment arbitrations and mediations before FINRA, AAA, and JAMS. We also appear before state and federal agencies, including the EEOC, Department of Labor, and state divisions of human rights on our clients’ behalf. 

Regulatory Representations/Enforcement

We represent members of the securities and financial services industry, public registrants and others in a wide variety of regulatory matters involving the SEC, state securities regulators, FINRA and other self-regulatory organizations. We defend FINRA Member Firms and Associated Persons against, among other things, allegations of violations of just and equitable principles of trade, market timing, securities fraud, lack of supervision, insufficient books and records, licensure issues and other allegations before federal and state regulators and the self-regulatory organizations (SRO), in negotiations, on-the-record testimony, hearings and appeals to the SRO, regulators and courts.

We have extensive experience handling internal corporate and firm investigations including complaints of Discretion and Sexual Harassment as well as whistleblower complaints.  We handle civil, regulatory, and administrative hearings, and white-collar criminal investigations and trials. Our team includes SEC alumni who served the agency for more than two decades in senior roles—collectively as an assistant director, senior trial counsel, and branch chief in the SEC’s Division of Enforcement. Our team also includes certified public accountants, certified fraud examiners, and DOJ alumni with decades of investigatory and trial experience.

Consultations on Employment and ERISA Matters

Our attorneys represent employers on issues relating to their fiduciary status, prohibited transactions, tax qualification and Department of Labor, Securities and Exchange Commission, and FINRA examinations of retirement plan and IRS issues.

We work with both private and public sector entities and their plans and fiduciaries and also represent plans, employers, and fiduciaries before federal agencies such as the DOL and IRS. We consult with broker-dealers, banks, registered investment advisers, trust companies, insurance companies and mutual fund management companies on 401(k) recordkeeping services, investment products, and issues related to plan investments and retirement income. Our attorneys also represent broker-dealers, registered investment advisers, and insurance companies on issues related to fiduciary status and compliance, prohibited transactions and internal procedures, including most recently on the implementation of the SEC’s Regulation Best Interest (Reg BI). We have drafted agreements, disclosure documents, and Written Supervisory Procedures to assist with the implementation of the new standard of care, and supervision of that standard ahead of Reg BI compliance date of June 30, 2020.

Our experience also includes advising insurance companies and investment managers on the development of products and services that are consistent with ERISA’s fiduciary standards and prohibited transaction restrictions, including retirement income investments and guaranties.

We regularly participate in webcasts and conference calls for financial services companies, and provide updates and insights about regulation and examinations of the retirement industry for service providers, plan sponsors, broker-dealers, and registered investment advisers.

Regulatory and Compliance

We assist clients in maneuvering through the mazes of regulatory and self-regulatory organization rules and regulations for broker-dealers and registered investment advisers, including FINRA audits, FINRA 8210 inquiries, and SEC and Department of Justice subpoenas. 

There is an active regulatory environment for FINRA and SEC reporting obligations as well as increased regulatory scrutiny. We counsel clients concerning their best interest standard of care/fiduciary, compliance and reporting obligations with a focus on risk management, strengthening supervisory procedures and internal controls, increasing reports to management and fund boards, determining whether compliance policies and procedures are implemented as written, and heightening participation by the compliance and legal functions in matters involving regulatory issues.

We defend our clients during on-the-record testimony, disciplinary hearings brought by FINRA enforcement or state regulators and litigation brought by the SEC. Where appropriate, we negotiate settlements, including Acceptance, Waivers and Consents and Consent Decrees. We appeal disciplinary actions to FINRA’s National Adjudicatory Council, the SEC and district courts.

As one of the leading investment management practices in the U.S., we have also been called upon to provide independent assessments to many advisers of their risk management and supervisory frameworks, and overall compliance policies and procedures related to conflicts of interest, breaches of fiduciary duty and securities law violations. Our assessments have been performed both in the U.S. for domestic firms and abroad for large international advisers with extensive foreign operations.

In addition, we are actively engaged in assisting our broker-dealer clients with day-to-day challenges including strategic planning required by new regulations from FINRA, the SEC or the Department of Labor, and assisting in the drafting of written supervisory procedures to address the ever-changing regulatory environment.

Our lawyers have far-reaching experience in drafting and reviewing compliance manuals and related policies and procedures, including codes of ethics, valuation and pricing procedures, portfolio-trading policies, business continuity plans, proxy voting procedures, selective disclosure policies and anti-money-laundering programs. We have also counseled our clients on various compliance-related matters such as annual compliance testing and risk assessments.