FINRA May Lower Fines and Discipline for “Extraordinary Cooperation”
FINRA has issued a Notice to Members indicating that “extraordinary cooperation” during investigations could lead to a reduction in fines or a decision to take no disciplinary action. FINRA noted that cooperation is only one factor and that FINRA would also consider the nature of the conduct, the extent of customer harm, the duration of the misconduct, and the existence of prior disciplinary history. Extraordinary cooperation would include (1) self-reporting beyond regulatory reporting obligations; (2) correction prior to detection (or after detection if swift and serious action is taken); (3) extraordinary remediation including immediate and complete customer restitution; and (4) substantial assistance to FINRA including access to persons outside FINRA’s jurisdiction, conducting internal investigations, and cooperating with respect to industry issues.
OUR TAKE: Given this Notice, we recommend firms specifically ask FINRA whether they will get credit for “extraordinary cooperation”, how much credit, and what actions the firm should take.