FINRA Rule 2010 states that FINRA members must observe “high standards of commercial honor and just and equitable principles of trade” in the conduct of their business. If you think this rule seems broad, that’s because it is intentionally broad.
Y, por desgracia, los miembros de la FINRA no siempre están a la altura de estas elevadas normas prescritas en la Norma 2010 de la FINRA.
So what do you do if your broker, financial advisor, or other financial professional has failed to comply with its obligations under FINRA Rule 2010?
Broker misconduct across the securities industry and financial services industry costs investors millions of dollars in investment losses each year.
Such losses are often the result of fraud, misrepresentation, or negligent supervision of your account. While such misconduct can result in severe financial ramifications for you, fortunately, there are avenues to hold these wrongdoers accountable.
Si usted ha sufrido pérdidas que usted cree que son el resultado de su corredor de no mantener los altos estándares de honor comercial y principios equitativos de comercio, póngase en contacto con The Law Offices of Robert Wayne Pearce, P.A.
Discuss your case with an experienced investment loss attorney as soon as possible to get legal guidance on how you may be able to recover.
What Is FINRA Rule 2010?
FINRA Rule 2010 requires broker-dealers and FINRA-registered representatives to observe high standards of commercial honor and just and equitable principles of trade. FINRA Rule 0140 applies the same obligation to associated persons. The rule contains 22 words, making it one of the shortest and broadest rules the Financial Industry Regulatory Authority enforces.
Rule 2010 doesn’t list specific prohibited conduct. But it gives FINRA broad authority to discipline dishonest and unethical behavior even when no specific rule was broken.
The standard covers member firms and other registered firms, capital acquisition brokers, funding portals, and every individual broker registered through them.
Rule 2010 applies to FINRA members and their associated persons, but investors also frequently raise Rule 2010 violations in FINRA arbitration claims.
These claims often accompany allegations of unsuitable recommendations, unauthorized trading, churning, or failure to supervise.
Resumen de otras normas notables de la FINRA
Typically, FINRA conduct rules outline the specific conduct prohibited by the rule itself. For example:
- FINRA Rule 1122 prohibits FINRA members and other individuals from filing membership or registration information with FINRA that contains incomplete or inaccurate information;
- FINRA Rule 2111 requires brokers to only recommend investments or investment strategies that are suitable for the client; and
- FINRA Rule 5270 prohibits the front running of block transactions.
Entonces, ¿dónde entra en juego la norma FINRA 2010?
Investors usually cite Rule 2010 to address misconduct not described in other rules within the FINRA rulebook. Rule 2010 operates as a catch-all rule that allows FINRA to discipline business-related misconduct that may not violate a more specific FINRA rule.
¿Qué prohíbe la Norma 2010?
Rule 2010 sanctions brokers for bad faith or unethical “business-related” misconduct. The misconduct does not have to violate a specific law. But when it does, that can also support a finding that Rule 2010 was violated.
Las conductas consideradas poco éticas o inmorales, aunque no estén necesariamente prohibidas por la ley, autorizan la disciplina en virtud de la norma.
Since Rule 2010 is about honesty and fair dealing, FINRA expects members to conduct themselves in ways that reflect moral business principles. Those ethical obligations run through every part of a member’s business and improve investor confidence.
Rule 2010 measures ethical conduct and not technical compliance, so dishonest practices and departures from ethical business practices can support discipline. Professional behavior outside of a single transaction counts as well.
Requisito relacionado con la empresa
FINRA Rule 2010 mandates that the alleged misconduct be business-related, meaning tied to the member’s business activities, to qualify for discipline under this rule.
In a 2019 FINRA disciplinary action, a FINRA Hearing Panel explained that the relationship between the FINRA member’s unethical conduct of his or her securities business does not have to be closely connected.
Más bien, el Panel dio a entender que la Regla 2010 se extiende a cualquier conducta indebida que "se refleje en la capacidad de la persona asociada para cumplir con los requisitos reglamentarios del negocio de valores y para cumplir con [sus] deberes fiduciarios en el manejo del dinero de otras personas".
That reading lets FINRA reach conduct outside of securities transactions when it bears on how securities professionals handle other people’s money.
Ejemplos de infracciones de la norma FINRA 2010
Every Rule 2010 case depends on its own facts and circumstances. FINRA looks at the full context of the misconduct before deciding whether the rule was violated.
Remember, a Rule 2010 violation occurs even in circumstances when a broker does not commit a violation of state or federal law.
Entre las acciones que se consideran una violación de la Regla 2010 se incluyen:
- Misappropriating client funds or funds belonging to an employer;
- Compartir la información confidencial de los clientes sin aprobación;
- Falsificación de firmas;
- Hacer modificaciones en los documentos financieros importantes;
- Solicitar donaciones para beneficio personal u otros usos no autorizados;
- Misrepresenting financial information or providing false and misleading information to customers; and
- Negarse a pagar los honorarios de los abogados y otros gastos después de iniciar un litigio contra un cliente.
Rule 2010 allegations against stock brokers arise frequently in conjunction with allegations that a broker violated another FINRA Rule.
What Are the Penalties for Violating FINRA Rule 2010?
There is no fixed penalty for a Rule 2010 violation. FINRA Rule 8310 gives adjudicators a range of sanctions to work with, and the National Adjudicatory Council publishes Sanction Guidelines so that members and their counsel understand which sanctions apply to which violations.
Severity depends on the underlying misconduct, the harm caused, and whether the broker acted intentionally or negligently.
Sanctions available under Rule 8310 include:
- Censure
- Fines against the firm, the individual, or both
- Suspension of a firm’s membership or an individual’s registration for a definite period
- A bar from associating with any FINRA member, or expulsion of the firm
- Temporary or permanent cease and desist orders
- Restitution or disgorgement of money the broker gained through the misconduct
The Sanction Guidelines treat a suspension longer than two years as an indication that a bar or expulsion is the more appropriate outcome.
Fine ranges vary widely depending on the conduct and the size of the firm, with large firms facing the highest exposure. In 2021, FINRA ordered Robinhood Financial LLC to pay roughly $70 million over supervisory failures and customer harm, the largest financial penalty the regulator has ever imposed. A disciplined member can appeal a FINRA decision to the Securities and Exchange Commission.
Every one of these sanctions also lands on the broker’s CRD record and appears on BrokerCheck, where future clients and employers can see it.
Keep in mind that fines are paid to FINRA and not to the people who suffered the losses. Restitution gets ordered in some cases, but no regulator is obligated to make you whole, and disciplinary proceedings move on their own schedule regardless of what you lost. Recovering your money requires a claim of your own.
What Evidence Should You Gather to Prove a FINRA Rule 2010 violation?
The evidence that may help support a FINRA Rule 2010 claim includes:
- Account statements and trade confirmations
- New account forms, risk-tolerance questionnaires, and investment profile records
- Prospectuses, disclosures, and other documents you received from your broker or firm
- Notes from phone calls, meetings, or other conversations with your broker
- Emails, text messages, WhatsApp conversations, portal messages, and other communications discussing investment recommendations or account activity
- A timeline connecting recommendations, trades, and the losses that followed
- Screenshots, chat exports, or other records that help preserve electronic communications
If you believe your broker engaged in misconduct, preserve as much documentation as possible and avoid deleting communications.
An experienced investment fraud attorney can review the evidence and determine whether it supports a FINRA arbitration claim based on Rule 2010 or other applicable FINRA rules.
Póngase en contacto con un abogado especializado en pérdidas de inversiones para responder a sus preguntas sobre la Norma 2010
Of course, even with Rule 2010 in place, FINRA members will inevitably fall short of these standards. When they do, know you can turn to The Law Offices of Robert Wayne Pearce, P.A.
If your broker violated Rule 2010, your route to recovery runs through FINRA arbitration rather than the court system.
Most brokerage account agreements contain an arbitration clause, so a panel hears the claim and issues an award that is binding and enforceable. Many claims never reach a hearing. Firms often settle once they see the documentation supporting the allegations, which can put money back in your pocket months earlier than a full arbitration would.
Our investment fraud lawyer team represents individual investors nationwide from offices across the country. We handle broker misconduct, breach of fiduciary duty, unsuitable recommendations, churning, unauthorized trading, failure to supervise, and other investment fraud claims involving brokerage firms and individual brokers.
Wherever your account was held and whichever firm employed your advisor, we can review what happened and tell you whether a claim is worth pursuing.
