As a financial advisor, you've likely heard mention of an OTR or ‘on the record' interview with FINRA. Perhaps you've spoken with a coworker who has experienced an OTR, or you are facing one yourself. Whether you are currently under investigation or simply curious about the process, you will protect yourself and your career by understanding the OTR and how to best navigate the situation.
What is an OTR?
An OTR is a formal ‘on the record' interview with FINRA staff. You, the witness, will be put under oath and asked questions about the investigation at hand. The process is similar to a deposition in a court setting.
Note that not every FINRA examination will include an OTR. Typically, these interviews are conducted when the regulators expect to find evidence of wrongdoing and are anticipating disciplinary action of some type. Keep in mind, however, that in some situations you may be brought in for an OTR simply as a witness, and not as the subject of the examination. However, if the matter at hand is related to your own conduct, perhaps as the result of a client complaint or a U5 disclosure, you are most likely the one facing disciplinary action.
Whether you believe you are the one facing sanctions or not, we strongly recommend seeking experienced legal counsel when called for an OTR. An attorney can prepare you on how to listen carefully to the questions asked and answer appropriately. Most importantly, you must answer questions truthfully, or else you could face perjury charges and serious repercussions to your career.
In some situations, it may be appropriate to decline the OTR. However, this is only recommended in cases where appearing and answering questions honestly could expose you to criminal charges, and should only be done under advice of experienced counsel. Declining to appear can lead to you being barred from association with a FINRA member, but in some situations, this is favorable to the criminal ramifications of testifying.
How does the OTR Work?
After learning what the OTR is, you may still have questions about how the process works. Particularly for those facing an OTR, knowing what to expect and what you will experience can help relieve some anxiety and be of great benefit when preparing.
The OTR interview will be conducted either in person at a FINRA office, or via video conference. If it is in person, you will travel to a FINRA office somewhere in the United States, where you will find yourself sitting across a conference table from two or three FINRA staff members. A court reporter will also be present, whose responsibility is to swear you in and transcribe the meeting. If you have one (and you certainly should), your attorney will also be in attendance. If the interview is held via video conference, the same people will be present and the process will be the same, with the only difference being that you are in different locations and communicating through a webcam.
After you are sworn in, the FINRA employees will begin by giving you instructions about how the interview works, and then they will begin asking you questions. The first questions will be housekeeping matters, simply confirming that you are there in response their request under Rule 8210, and that you do not suffer from any mental illness or impairment that prevents you from answering their questions truthfully. Then they will move on to questions related to your background, such as your education, work history, and experience in the securities industry. Finally, they will begin asking you questions related to the matter at hand. During the interview, they may present some exhibits, or evidence, such as documents pertinent to the investigation. Your lawyer will have prepared you for this, and explained how to listen to and answer questions carefully.
Many advisors expect the OTR to be a hostile or aggressive experience, but this is not the case. While pop culture may put an image of a darkened room with two angry investigators grilling a subject in your head, know that this is not reality. The FINRA investigators aren't going to yell, curse, or berate you. The interview will be held in a calm, professional, and even friendly manner. The questions they ask may indeed be difficult questions, and you may feel uncomfortable, but everyone involved will be civil and courteous.
This brings us to an important point—expect to be uncomfortable, or even intimidated, at some point in the interview. As we mentioned, an OTR is typically only held if the investigators believe they have evidence against you, and this means that they will ask you questions you may be afraid to answer. However, you must answer honestly, even if it costs you. The consequences of lying might outweigh the consequences of the examination itself. Your attorney will help you anticipate and answer these difficult questions, and advise you on what to expect as a result of your honesty.
At the end of the interview, your attorney will have the opportunity to ask some clarifying questions on your behalf. Then, you will have a chance to make a statement if you wish. For a variety of reasons, however, we recommend that you do not do so. Your attorney will help you decide on the matter.
Finally, the FINRA staff will declared the interview over and the record closed. The investigation will continue, as the FINRA staff write their report and decide if any disciplinary action is warranted.
While the OTR process can be nerve wracking, and you cannot control the outcome, you will do well if you heed you attorney's advice and answer questions honestly. The bottom line is this: treat the matter seriously, and get counsel. Don't brush off the OTR, or think that you can handle it on your own. How you handle an OTR can have major consequences on your career. You want a knowledgeable attorney with experience in these matters in your corner to help you make the best decisions at each stage of an examination.
If you are in need of counsel for a regulatory investigation or an OTR, call The Beck Law Firm at (678) 344-5342. We have the skill, knowledge, and experience to represent you and help you seek a favorable outcome for your situation.
If you're facing an investigation, click here to request a free copy of Joel Beck's book the Financial Advisor's Guide to Regulatory Investigations. For those looking for more information on the investigation process, the book is available for purchase on Amazon.com.
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