New York, NY securities attorney Jenice L. Malecki talks about the potential consequences of failing to cooperate with a FINRA or SEC investigation. She notes that failing to cooperate in an SEC investigation can have serious consequences. The SEC often works with the FBI, which can obtain a court order to seize computers or other records. Cooperation is therefore critical, even if invoking the Fifth Amendment becomes necessary. In FINRA proceedings, failure to cooperate can result in being barred from holding any licenses, a permanent mark on one’s professional record.

Some individuals mistakenly assume that they can simply leave the securities industry and ignore a FINRA bar, but she emphasizes that this is a short-sighted approach. A FINRA bar is highly visible online and will appear in searches, potentially affecting future employment opportunities and requiring disclosure in applications.

She has represented numerous clients navigating FINRA fitness and bar proceedings. Her advice is to negotiate for the minimum possible penalty and attempt to settle, even if the individual no longer intends to remain in the industry. This approach allows some control over the language and terms of the settlement. She also stresses the importance of keeping one’s address updated with FINRA, as failing to receive correspondence can inadvertently lead to a bar. Overall, unless there is criminal wrongdoing, producing requested documents and engaging proactively with regulators is the most effective strategy.