One of the questions we get from time to time is from a financial adviser who has called us and said, “FINRA wants to take my testimony, they’ve told me they want me to come in for an OTR. Why? Why do they want to take an OTR of me?”
That’s a good question. Essentially what it means when FINRA wants to take your testimony, when they want to put you under oath in an on-the-record interview (OTR), is that they’re pretty sure that they’ve got a rule violation for which it may be appropriate to take an enforcement action. Now, it may mean that they’re looking to bring an enforcement action against you, or maybe it’s someone else, or a firm; but often, more often than not, if they’re taking the step of going through the time, energy and expense of bringing you in for testimony, they think that there’s a pretty good likelihood that there’s a rule violation somewhere.
The second reason that they often want to take your testimony is to lock you into a story. They want to get your story down solid, and they want to lock you into that. They’re putting you under oath. You’ve got an obligation to tell the truth, and so they’ll ask you questions about what happened. They’re going to ask you the questions, and they’re going to lock you in and preserve the evidence of your answers by way of a transcript. Rest assured, if they bring an enforcement action, they may very well seek to use that transcript against you with those answers that you’ve given.
Those are the two main reasons that FINRA wants to take your testimony in most situations. Should you go it alone and go in for an OTR without a lawyer? No. In my view, that’s a very unwise decision, and it could wind up being a very costly decision for you as well.
If you are facing a regulatory investigation by FINRA, I invite you to contact us to discuss your situation and see if we can be of help. And, I also invite you to request a free copy of my book, The Financial Advisor’s Guide to Regulatory Investigations online.
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