New York, NY securities attorney Jenice L. Malecki talks about her role in internal investigations in the securities industry. She notes that in the securities industry, internal investigations are fairly common. These can be conducted by the firm itself, focusing on its own compliance and supervision, or by regulators such as the SEC or FINRA, who may conduct audits or select specific individuals to review for potential breaches of rules. Investigations can also target an individual directly, often triggered by a customer complaint—sometimes even a seemingly minor or frivolous one, like a small account loss. During the review, other issues may surface, such as time-and-price discretion errors or incomplete forms.

She emphasizes that it is crucial to retain a lawyer before responding in writing to the firm. Individuals are often too close to the situation to provide a response that is both succinct and compliant with regulatory expectations. A lawyer can help ensure that the response does not inadvertently escalate the matter, navigate the rules carefully, and prevent potential “landmines” from arising during the investigation.