FINRA Enforcement: A New Playbook
On June 30, 2026, the Financial Industry Regulatory Authority (“FINRA”) published an independent external review and recommended changes to FINRA’s enforcement program (the “Report ”). Although the Report does not amend FINRA rules or create new legal obligations, FINRA’s leadership has publicly committed to embracing the recommendations as part of its FINRA Forward program and its effort to make enforcement more fair, transparent, and effective. Counsel should treat the report as a roadmap for where FINRA enforcement may go next and how it will get there.
The Report’s core recommendation is that FINRA should run enforcement matters with more structure, transparency, and accountability.
Key Takeaways
First, member firms will now be able to advocate for themselves as early as when a matter is referred to FINRA Enforcement. The Report recommends that FINRA advise firms in writing that a matter has been referred, give the names and roles of assigned Enforcement staff, and inform them of the nature of FINRA’s concerns and the potential violations at issue. It also recommends a structured opportunity for firms to present their views on the merits, including with participation by non-Enforcement subject-matter experts where appropriate. Counsel should be ready to use this stage to tell the firm’s story early, including explaining the business model, control environment, customer impact, remediation, and any reasons why formal discipline may not be warranted.
Second, FINRA may have to provide more information to member firms before settlement or litigation. The Report recommends enhanced Wells procedures, including a reasonably detailed explanation of FINRA’s theory of the case, legal analysis, view of the facts, rationale for any proposed resolution, and proposed sanctions. Firms should treat Wells submissions and post-Wells advocacy as critical opportunities to narrow issues, correct factual assumptions, build mitigation, and frame sanctions before a Letter of Acceptance, Waiver, and Consent (“AWC”) or complaint is finalized.
Third, FINRA Rule 8210 requests may become more disciplined, but burden arguments will need supporting evidence. The Report recommends more senior supervision by FINRA Enforcement Staff over information requests to safeguard against overbroad or inappropriate requests, as well as the establishment of a formal process for firms to challenge overly broad document requests to a neutral arbiter. Firms should therefore create a contemporaneous record of data sources, search methodology, production burden, privilege issues, duplicative requests, proposed alternatives, and escalation history.
Fourth, cooperation credit may become more valuable. The Report recommends that cooperation credit not necessarily be limited to “extraordinary” cooperation and not necessarily be precluded simply because self-reporting or remediation was otherwise expected. It also recommends greater transparency regarding the degree of credit awarded and fuller AWC explanations of the reasons for that credit. Firms should build a cooperation record from day one that captures early detection, escalation, preservation, efficient production, root-cause analysis, remediation, customer-impact review, restitution where appropriate, testing, governance oversight, and ways the firm saved FINRA time and resources.
Fifth, sanctions and AWC language may become more negotiable. The Report recommends that FINRA limit “tag along” Rule 2010 charges where the underlying violation does not itself involve fraudulent or otherwise unethical conduct. It also recommends that FINRA clarify that the Sanction Guidelines apply to settlements, explain whether proposed sanctions are consistent with those guidelines, and document departures. Counsel should be prepared to press the key questions, such as whether the conduct was technical or intentional, whether customer harm occurred, whether remediation was timely, whether prior matters are truly comparable, and whether proposed sanctions are proportionate.
Finally, the Report gives member firms more opportunities to challenge stale or duplicative enforcement. The Report suggests that FINRA initially observe corresponding federal limitations periods for charges tied to the federal securities laws and consider a standard five-year limitation period for all other matters. It also recommends that FINRA avoid duplicative enforcement where another regulator’s action sufficiently advances the relevant regulatory objectives, unless a FINRA action would add distinct value. Firms facing parallel SEC, CFTC, DOJ, state, or SRO inquiries should preserve arguments regarding timeliness, overlap, incremental regulatory benefit, and settlement credit.
Practical Implications for In-House Counsel
In-house counsel should consider updating enforcement-response playbooks for earlier referral-stage advocacy, more structured Wells engagement, and tighter documentation of burden, cooperation, remediation, and customer impact. Firms should also identify recurring operational-control themes before FINRA does, because improved internal FINRA tracking and coordination may make repeat issues more visible across examinations, surveillance inquiries, investigations, and enforcement matters.
In addition, firms should advocate for resolution of matters prior to any referral to enforcement. This may include documenting at the outset of a matter detection and escalation, key communications with FINRA, customer-impact analysis, testing results, governance materials, and remediation. A strong record should help firms take advantage of any implemented reforms relating to early engagement, cooperation credit, streamlined resolution, sanctions proportionality, and AWC context.
