In re FINANCIAL INDUSTRY

 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No.  65643 / October 27, 2011 
 
ADMINISTRATIVE PROCEEDING 
File No.  3-14605 
 
In the Matter of 
 
FINANCIAL INDUSTRY 
REGULATORY 
AUTHORITY, INC.,  
 
Respondent. 
 
 
 
 
ORDER INSTITUTING CEASE-AND-DESIST 
PROCEEDINGS PURSUANT TO SECTION 
21C OF THE SECURITIES EXCHANGE ACT 
OF 1934, MAKING FINDINGS, AND 
IMPOSING A CEASE-AND-DESIST ORDER 
   
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
Exchange Act of 1934 (“Exchange Act”) against the Financial Industry Regulatory Authority, Inc. 
(“FINRA” or “Respondent”). 
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over FINRA and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.   
 

 2 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 
 that: 
Summary 
 
 These proceedings arise out of FINRA’s production of altered documents in response to a 
document request made by the Commission’s Chicago Regional Office inspection staff (“the 
Commission inspection staff”).  
 
 Specifically, on August 7, 2008, the Director of FINRA’s Kansas City District Office (“the 
Director”) caused the alteration of three records of staff meeting minutes just hours before 
producing them to the Commission inspection staff, making them inaccurate and incomplete.  
 
 The Director’s misconduct is the third instance during an eight year period in which a 
FINRA employee, or an employee of its predecessor, the National Association of Securities 
Dealers, Inc. (“NASD”), provided altered or misleading documents to the Commission.  Although 
FINRA has endeavored to improve its procedures and training since document integrity issues came 
to light in May 2006 and December 2007, those efforts were not effective in preventing the 
Director’s misconduct. 
 
Respondent 
 
 FINRA,  located in Washington,  DC, is a national securities association registered with the 
Commission pursuant to Section 15A of the Exchange Act.  It was created on July 30, 2007 
through the consolidation of NASD and the member regulation, enforcement and arbitration 
functions of the New York Stock Exchange (“NYSE”).  As a registered association, FINRA has 
the statutory obligation to comply with the Exchange Act and to enforce compliance by its 
members with the Exchange Act and its own rules.  It is the largest independent regulator of 
securities firms doing business with the public in the United States.  As of December 31,  2010, 
FINRA oversaw nearly 4,600 brokerage firms, approximately 163,000 branch offices and almost 
631,000 registered securities representatives. 
 
Other Relevant Entities 
 
 NASD, formerly located in Washington, DC, was a national securities association 
registered with the Commission pursuant to Section 15A of the Exchange Act until it was 
consolidated with the member regulation,  enforcement and arbitration operations of the NYSE to 
form FINRA in July 2007. 
 
                                                 
1
 The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding 
on any other person or entity in this or any other proceeding.
 

 3 
Facts 
 
FINRA Fails to Furnish Complete and Accurate Records 
 
 On July 28, 2008, FINRA’s Kansas City District Office received a document request from 
the Commission inspection staff.  The request related to a previously announced inspection of 
FINRA’s Kansas City District Office, which is responsible for conducting FINRA’s regulatory 
programs in seven states.  
 
 Item 36 of the document request letter asked for “Minutes of District staff meetings 
conducted between November 1, 2005 and the present.”  On August 7, 2008—hours before 
furnishing the Commission inspection staff with FINRA’s response to Item 36—the Director 
caused the minutes for meetings that took place on August 28, 2006, September 22, 2006 and 
January 31, 2007 to be altered.  Specifically, certain information was deleted or edited, while in 
other instances, entire passages were removed or changed.  With respect to all three altered 
documents, the original author’s signature was changed to the Director’s.    
 
FINRA Alerts the Commission Staff To Document Integrity Issues in Kansas City Inspection 
 
FINRA learned of the Kansas City District’s document integrity issues through a 
whistleblower complaint submitted on June 11, 2010.  Using FINRA’s EthicsPoint System, an 
anonymous individual alleged that the Director instructed another FINRA employee to alter Staff 
Meeting Minutes before they were burned to a CD and provided to the Commission in connection 
with an oversight inspection of the District Office.  Within days of receiving the complaint, FINRA 
initiated an internal investigation led by its Internal Audit staff.  Also, FINRA’s Internal Audit staff 
verbally communicated the whistleblower allegations to FINRA’s Audit Committee on July 13, 
2010. 
 
Based on Internal Audit’s findings, the Director tendered his resignation from FINRA on 
September 20, 2010.  That same day, FINRA sent a letter notifying staff from the Commission’s 
Chicago Regional Office and its Division of Enforcement about the Director’s conduct.  Internal 
Audit reported the results of its investigation to FINRA’s Audit Committee on September 21, 
2010.   
 
FINRA’s Internal Guidance on Document Integrity 
 
FINRA employees have produced altered or misleading documents to Commission 
inspection staff on three separate occasions over the past eight years.  In one instance during 2004, 
an NASD director misled Commission examiners by providing misdated or otherwise altered 
documents.  In a separate, unrelated instance in 2005, misleading documents, purportedly intended 
for internal-use only, were produced to a Commission inspection team. 
 
NASD took corrective actions to address these specific failures prior to NASD’s 
consolidation with certain regulatory functions of the NYSE to form FINRA in July 2007.  In 

 4 
addition, FINRA cooperated with the Commission staff investigating FINRA’s document integrity 
problems and implemented improved procedures and training related to document integrity. 
 
Notwithstanding these improvements, the Commission finds that FINRA has not ensured 
the integrity of documents provided to the Commission, as demonstrated by the Kansas City 
Director causing the alteration of three records just hours before FINRA produced them to 
Commission inspection staff, rendering them inaccurate and incomplete. 
 
Violation of Section 17(a)(1) of the Exchange Act and Exchange Act Rule 17a-1 
 
As a result of the conduct described above, FINRA violated Section 17(a)(1) of the 
Exchange Act and Exchange Act Rule 17a-1.  Section 17(a)(1) of the Exchange Act requires a 
national securities association such as FINRA to make and keep for prescribed periods such 
records, and to furnish such copies thereof, as the Commission by rule prescribes as necessary or 
appropriate in the public interest, for the protection of investors, or for other purposes set forth in 
the Exchange Act.  Exchange Act Rule 17a-1(a) requires a national securities association to keep 
and preserve at least one copy of all correspondence, records, and other documents made or 
received by it in the course of its business as such and in the conduct of its self-regulatory activity.  
Rule 17a-1(c) requires a national securities association promptly to furnish the Commission with a 
copy of any such document that the Commission requests.  The requirement that a national 
securities association keep and furnish records to the Commission includes the requirement that 
those records be complete and accurate. 
 
 The preparation, maintenance and furnishing of complete and accurate records are essential 
to the proper functioning of a national securities association as a self-regulatory organization.  As 
described above, FINRA failed to keep and furnish complete and accurate records made or 
received by it in the course of its business as such and in the conduct of its self-regulatory activity.  
   
FINRA’s Remedial Efforts 
In determining to accept the Offer, the Commission considered remedial acts 
promptly undertaken by Respondent and cooperation afforded the Commission staff. 
Undertakings 
 
 Respondent FINRA has undertaken to: 
 
A. Provide training to all of its employees outlining past document integrity issues, 
which will incorporate a fact scenario based upon the Kansas City conduct, and 
emphasize FINRA’s zero-tolerance policy regarding the alteration of documents.  
 
B. Develop a podcast on document integrity to be shown to all current staff and to all 
new employees upon hiring. 
 

 5 
C. Address directly the importance of document integrity at a company-wide town hall 
meeting, annual regulatory meetings, and during Senior Management onsite visits to 
all district offices. 
 
D. Require senior members of its Office of Liaison and Counsel to meet in-person or 
remotely with every business unit scheduled for an on-site exam prior to the 
production of documents to the Commission to emphasize the importance of 
document integrity. 
 
E. Engage an Independent Consultant (the “Consultant”), not unacceptable to the 
Commission, within thirty (30) days of the issuance of this Order. 
 
i. FINRA will require the Consultant to: (1) conduct a one-time comprehensive 
review of FINRA’s policies and procedures and training relating to document 
integrity; (2) assess whether the policies and procedures and training are 
reasonably designed and implemented to ensure the integrity of documents 
provided to the Commission; and (3) make recommendations for the enhancement 
of FINRA’s policies and procedures and training as may be necessary in light of 
the Consultant’s review and assessment. 
 
ii. FINRA will require the Consultant to submit a report of his/her findings and 
recommendations (the “Report”) to the FINRA Board within three (3) months of 
the Consultant’s engagement.  Within thirty (30) days of receiving the Report, the 
FINRA Board will adopt all recommendations made by the Consultant, subject to 
Section E.iii below, and take steps necessary to commence implementation of all 
such recommendations.  FINRA will direct the Consultant to provide promptly 
copies of the Report to the Commission’s Deputy Director of Enforcement. 
 
iii. Within thirty (30) days of receiving the Report, the FINRA Board may notify the 
Consultant, in writing, of any recommendation(s) that it considers to be unduly 
burdensome or impractical with an explanation of why the recommendation is 
unduly burdensome or impractical.  The FINRA Board and the Consultant shall 
attempt in good faith to reach an agreement on an alternative recommendation 
that is reasonably designed to accomplish the same objectives as the 
recommendation in question.  If an agreement is reached, FINRA will direct the 
Consultant to amend his/her recommendation(s), reissue the Report within fifteen 
(15) days of reaching an agreement, and the FINRA Board shall adopt the 
Consultant’s recommendation(s) within thirty (30) days of receiving the amended 
Report.  In the event that the FINRA Board and the Consultant are unable to agree 
on an alternative recommendation within forty five (45) days of the FINRA 
Board’s written notification, the Consultant’s recommendation shall be binding 
and the FINRA Board shall adopt the Consultant’s original recommendation(s) 
within thirty (30) days.   
 

 6 
iv. Within nine (9) months of the FINRA Board’s receipt of the Consultant’s Report, 
or receipt of the Consultant’s amended Report if applicable under Section E.iii 
above, FINRA will certify in writing to the Commission’s Deputy Director of 
Enforcement that all of the Consultant’s recommendations adopted by the FINRA 
Board have been implemented or, if the Consultant determines that any 
recommendation cannot be implemented within nine (9) months, will be 
implemented within the period specified by the Consultant. 
 
v. FINRA shall require the Consultant to enter into an agreement that provides that 
for the period of engagement and for a period of two years from completion of the 
engagement, the Consultant shall not enter into any employment, consultant, 
attorney-client, auditing or other professional relationship with FINRA, or any of 
its present or former affiliates, directors, officers, employees, or agents acting in 
their capacity.  The agreement will also provide that the Consultant will require 
that any firm with which he/she is affiliated or of which he/she is a member, and 
any person engaged to assist the Consultant in performance of his/her duties under 
this Order shall not, without prior written consent of the Commission’s Deputy 
Director of Enforcement, enter into any employment, consultant, attorney-client, 
auditing or other professional relationship with FINRA, or any of its present or 
former affiliates, directors, officers, employees, or agents acting in their capacity 
as such for the period of the engagement and for a period of two years after the 
engagement. 
 
vi. FINRA shall expend sufficient funds to permit the Consultant to discharge all of 
their duties, including, but not limited to, providing adequate funds for the 
retention of outside counsel and/or professionals. 
 
F. Certify, in writing, compliance with the undertaking(s) set forth above.  The 
certification shall identify the undertaking(s), provide written evidence of compliance 
in the form of a narrative, and be supported by exhibits sufficient to demonstrate 
compliance.  The Commission staff may make reasonable requests for further evidence 
of compliance, and Respondent agrees to provide such evidence.  The certification and 
supporting material shall be submitted to the Commission’s Deputy Director of 
Enforcement, with a copy to the Office of Chief Counsel of the Commission’s 
Enforcement Division, no later than sixty (60) days from the date of the completion of 
the undertakings. 

 7 
IV. 
 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent FINRA’s Offer. 
 
 Accordingly, pursuant to Section 21C of the Exchange Act, it is hereby ORDERED that: 
 
A. Respondent FINRA shall cease and desist from committing or causing any 
violations and any future violations of Section 17(a) of the Exchange Act and Rule 
17a-1 thereunder; and 
 
B.    Respondent FINRA shall comply with its undertakings as enumerated in Section III 
above. 
 
 
 
 By the Commission. 
 
 
 
       Elizabeth M. Murphy 
       Secretary 
 

UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No.  65643 / October 27, 2011 
 
ADMINISTRATIVE PROCEEDING 
File No.  3-14605 
 
In the Matter of 
 

FINANCIAL INDUSTRY 
REGULATORY 
AUTHORITY, INC.,  

 
Respondent. 
 
 
 
 

ORDER INSTITUTING CEASE-AND-DESIST 
PROCEEDINGS PURSUANT TO SECTION 
21C OF THE SECURITIES EXCHANGE ACT 
OF 1934, MAKING FINDINGS, AND 
IMPOSING A CEASE-AND-DESIST ORDER 

   
 

I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
Exchange Act of 1934 (“Exchange Act”) against the Financial Industry Regulatory Authority, Inc. 
(“FINRA” or “Respondent”). 

 
II. 

 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over FINRA and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.   
 



 2 

III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds1

 
 that: 

Summary 
 
 These proceedings arise out of FINRA’s production of altered documents in response to a 
document request made by the Commission’s Chicago Regional Office inspection staff (“the 
Commission inspection staff”).  
 
 Specifically, on August 7, 2008, the Director of FINRA’s Kansas City District Office (“the 
Director”) caused the alteration of three records of staff meeting minutes just hours before 
producing them to the Commission inspection staff, making them inaccurate and incomplete.  
 
 The Director’s misconduct is the third instance during an eight year period in which a 
FINRA employee, or an employee of its predecessor, the National Association of Securities 
Dealers, Inc. (“NASD”), provided altered or misleading documents to the Commission.  Although 
FINRA has endeavored to improve its procedures and training since document integrity issues came 
to light in May 2006 and December 2007, those efforts were not effective in preventing the 
Director’s misconduct. 
 

Respondent 
 
 FINRA, located in Washington, DC, is a national securities association registered with the 
Commission pursuant to Section 15A of the Exchange Act.  It was created on July 30, 2007 
through the consolidation of NASD and the member regulation, enforcement and arbitration 
functions of the New York Stock Exchange (“NYSE”).  As a registered association, FINRA has 
the statutory obligation to comply with the Exchange Act and to enforce compliance by its 
members with the Exchange Act and its own rules.  It is the largest independent regulator of 
securities firms doing business with the public in the United States.  As of December 31, 2010, 
FINRA oversaw nearly 4,600 brokerage firms, approximately 163,000 branch offices and almost 
631,000 registered securities representatives. 

 
Other Relevant Entities 

 
 NASD, formerly located in Washington, DC, was a national securities association 
registered with the Commission pursuant to Section 15A of the Exchange Act until it was 
consolidated with the member regulation, enforcement and arbitration operations of the NYSE to 
form FINRA in July 2007. 
 

                                                 
1 The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding 

on any other person or entity in this or any other proceeding. 



 3 

Facts 
 

FINRA Fails to Furnish Complete and Accurate Records 
 
 On July 28, 2008, FINRA’s Kansas City District Office received a document request from 
the Commission inspection staff.  The request related to a previously announced inspection of 
FINRA’s Kansas City District Office, which is responsible for conducting FINRA’s regulatory 
programs in seven states.  
 
 Item 36 of the document request letter asked for “Minutes of District staff meetings 
conducted between November 1, 2005 and the present.”  On August 7, 2008—hours before 
furnishing the Commission inspection staff with FINRA’s response to Item 36—the Director 
caused the minutes for meetings that took place on August 28, 2006, September 22, 2006 and 
January 31, 2007 to be altered.  Specifically, certain information was deleted or edited, while in 
other instances, entire passages were removed or changed.  With respect to all three altered 
documents, the original author’s signature was changed to the Director’s. 
 
FINRA Alerts the Commission Staff To Document Integrity Issues in Kansas City Inspection 
 

FINRA learned of the Kansas City District’s document integrity issues through a 
whistleblower complaint submitted on June 11, 2010.  Using FINRA’s EthicsPoint System, an 
anonymous individual alleged that the Director instructed another FINRA employee to alter Staff 
Meeting Minutes before they were burned to a CD and provided to the Commission in connection 
with an oversight inspection of the District Office.  Within days of receiving the complaint, FINRA 
initiated an internal investigation led by its Internal Audit staff.  Also, FINRA’s Internal Audit staff 
verbally communicated the whistleblower allegations to FINRA’s Audit Committee on July 13, 
2010. 
 

Based on Internal Audit’s findings, the Director tendered his resignation from FINRA on 
September 20, 2010.  That same day, FINRA sent a letter notifying staff from the Commission’s 
Chicago Regional Office and its Division of Enforcement about the Director’s conduct.  Internal 
Audit reported the results of its investigation to FINRA’s Audit Committee on September 21, 
2010.   
 

FINRA’s Internal Guidance on Document Integrity 
 

FINRA employees have produced altered or misleading documents to Commission 
inspection staff on three separate occasions over the past eight years.  In one instance during 2004, 
an NASD director misled Commission examiners by providing misdated or otherwise altered 
documents.  In a separate, unrelated instance in 2005, misleading documents, purportedly intended 
for internal-use only, were produced to a Commission inspection team. 

 
NASD took corrective actions to address these specific failures prior to NASD’s 

consolidation with certain regulatory functions of the NYSE to form FINRA in July 2007.  In 



 4 

addition, FINRA cooperated with the Commission staff investigating FINRA’s document integrity 
problems and implemented improved procedures and training related to document integrity. 

 
Notwithstanding these improvements, the Commission finds that FINRA has not ensured 

the integrity of documents provided to the Commission, as demonstrated by the Kansas City 
Director causing the alteration of three records just hours before FINRA produced them to 
Commission inspection staff, rendering them inaccurate and incomplete. 

 
Violation of Section 17(a)(1) of the Exchange Act and Exchange Act Rule 17a-1 

 
As a result of the conduct described above, FINRA violated Section 17(a)(1) of the 

Exchange Act and Exchange Act Rule 17a-1.  Section 17(a)(1) of the Exchange Act requires a 
national securities association such as FINRA to make and keep for prescribed periods such 
records, and to furnish such copies thereof, as the Commission by rule prescribes as necessary or 
appropriate in the public interest, for the protection of investors, or for other purposes set forth in 
the Exchange Act.  Exchange Act Rule 17a-1(a) requires a national securities association to keep 
and preserve at least one copy of all correspondence, records, and other documents made or 
received by it in the course of its business as such and in the conduct of its self-regulatory activity.  
Rule 17a-1(c) requires a national securities association promptly to furnish the Commission with a 
copy of any such document that the Commission requests.  The requirement that a national 
securities association keep and furnish records to the Commission includes the requirement that 
those records be complete and accurate. 

 
 The preparation, maintenance and furnishing of complete and accurate records are essential 
to the proper functioning of a national securities association as a self-regulatory organization.  As 
described above, FINRA failed to keep and furnish complete and accurate records made or 
received by it in the course of its business as such and in the conduct of its self-regulatory activity.  
   

FINRA’s Remedial Efforts 

In determining to accept the Offer, the Commission considered remedial acts 
promptly undertaken by Respondent and cooperation afforded the Commission staff. 

Undertakings 
 

 Respondent FINRA has undertaken to: 
 

A. Provide training to all of its employees outlining past document integrity issues, 
which will incorporate a fact scenario based upon the Kansas City conduct, and 
emphasize FINRA’s zero-tolerance policy regarding the alteration of documents.  
 

B. Develop a podcast on document integrity to be shown to all current staff and to all 
new employees upon hiring. 
 



 5 

C. Address directly the importance of document integrity at a company-wide town hall 
meeting, annual regulatory meetings, and during Senior Management onsite visits to 
all district offices. 
 

D. Require senior members of its Office of Liaison and Counsel to meet in-person or 
remotely with every business unit scheduled for an on-site exam prior to the 
production of documents to the Commission to emphasize the importance of 
document integrity. 

 
E. Engage an Independent Consultant (the “Consultant”), not unacceptable to the 

Commission, within thirty (30) days of the issuance of this Order. 
 
i. FINRA will require the Consultant to: (1) conduct a one-time comprehensive 

review of FINRA’s policies and procedures and training relating to document 
integrity; (2) assess whether the policies and procedures and training are 
reasonably designed and implemented to ensure the integrity of documents 
provided to the Commission; and (3) make recommendations for the enhancement 
of FINRA’s policies and procedures and training as may be necessary in light of 
the Consultant’s review and assessment. 

 
ii. FINRA will require the Consultant to submit a report of his/her findings and 

recommendations (the “Report”) to the FINRA Board within three (3) months of 
the Consultant’s engagement.  Within thirty (30) days of receiving the Report, the 
FINRA Board will adopt all recommendations made by the Consultant, subject to 
Section E.iii below, and take steps necessary to commence implementation of all 
such recommendations.  FINRA will direct the Consultant to provide promptly 
copies of the Report to the Commission’s Deputy Director of Enforcement. 

 
iii. Within thirty (30) days of receiving the Report, the FINRA Board may notify the 

Consultant, in writing, of any recommendation(s) that it considers to be unduly 
burdensome or impractical with an explanation of why the recommendation is 
unduly burdensome or impractical.  The FINRA Board and the Consultant shall 
attempt in good faith to reach an agreement on an alternative recommendation 
that is reasonably designed to accomplish the same objectives as the 
recommendation in question.  If an agreement is reached, FINRA will direct the 
Consultant to amend his/her recommendation(s), reissue the Report within fifteen 
(15) days of reaching an agreement, and the FINRA Board shall adopt the 
Consultant’s recommendation(s) within thirty (30) days of receiving the amended 
Report.  In the event that the FINRA Board and the Consultant are unable to agree 
on an alternative recommendation within forty five (45) days of the FINRA 
Board’s written notification, the Consultant’s recommendation shall be binding 
and the FINRA Board shall adopt the Consultant’s original recommendation(s) 
within thirty (30) days.   

 



 6 

iv. Within nine (9) months of the FINRA Board’s receipt of the Consultant’s Report, 
or receipt of the Consultant’s amended Report if applicable under Section E.iii 
above, FINRA will certify in writing to the Commission’s Deputy Director of 
Enforcement that all of the Consultant’s recommendations adopted by the FINRA 
Board have been implemented or, if the Consultant determines that any 
recommendation cannot be implemented within nine (9) months, will be 
implemented within the period specified by the Consultant. 

 
v. FINRA shall require the Consultant to enter into an agreement that provides that 

for the period of engagement and for a period of two years from completion of the 
engagement, the Consultant shall not enter into any employment, consultant, 
attorney-client, auditing or other professional relationship with FINRA, or any of 
its present or former affiliates, directors, officers, employees, or agents acting in 
their capacity.  The agreement will also provide that the Consultant will require 
that any firm with which he/she is affiliated or of which he/she is a member, and 
any person engaged to assist the Consultant in performance of his/her duties under 
this Order shall not, without prior written consent of the Commission’s Deputy 
Director of Enforcement, enter into any employment, consultant, attorney-client, 
auditing or other professional relationship with FINRA, or any of its present or 
former affiliates, directors, officers, employees, or agents acting in their capacity 
as such for the period of the engagement and for a period of two years after the 
engagement. 

 
vi. FINRA shall expend sufficient funds to permit the Consultant to discharge all of 

their duties, including, but not limited to, providing adequate funds for the 
retention of outside counsel and/or professionals. 

 
F. Certify, in writing, compliance with the undertaking(s) set forth above.  The 

certification shall identify the undertaking(s), provide written evidence of compliance 
in the form of a narrative, and be supported by exhibits sufficient to demonstrate 
compliance.  The Commission staff may make reasonable requests for further evidence 
of compliance, and Respondent agrees to provide such evidence.  The certification and 
supporting material shall be submitted to the Commission’s Deputy Director of 
Enforcement, with a copy to the Office of Chief Counsel of the Commission’s 
Enforcement Division, no later than sixty (60) days from the date of the completion of 
the undertakings. 



 7 

IV. 
 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent FINRA’s Offer. 
 
 Accordingly, pursuant to Section 21C of the Exchange Act, it is hereby ORDERED that: 
 

A. Respondent FINRA shall cease and desist from committing or causing any 
violations and any future violations of Section 17(a) of the Exchange Act and Rule 
17a-1 thereunder; and 

 
B. Respondent FINRA shall comply with its undertakings as enumerated in Section III 

above. 
 
 
 
 By the Commission. 
 
 
 
       Elizabeth M. Murphy 
       Secretary 
 


	UNITED STATES OF AMERICA
	In the Matter of
	FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC., 
	Respondent.
	Respondent
	Other Relevant Entities
	Facts

	FINRA Fails to Furnish Complete and Accurate Records
	FINRA Alerts the Commission Staff To Document Integrity Issues in Kansas City Inspection
	FINRA’s Internal Guidance on Document Integrity
	Violation of Section 17(a)(1) of the Exchange Act and Exchange Act Rule 17a-1
	IV.