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🪪 Registration & Qualification · Lesson 4 of 4 · 6 min

Disqualified: Felonies, 8210 and FINRA Discipline

⚖️ Some events end your ability to work in the industry automatically, and refusing FINRA's questions can end it too.

💡 Key idea

Felony within 10 years = statutory disqualification. Answer 8210 requests or risk a bar. AWC settles without admit or deny.

🧠 Why it matters

STATUTORY DISQUALIFICATION (Exchange Act 3(a)(39)) bars association with a member unless FINRA grants relief. Triggers include ANY FELONY conviction within the past 10 YEARS, certain MISDEMEANORS (investment-related, theft, fraud, bribery) within 10 years, expulsion or suspension by an SRO, bars or certain orders from the SEC or other regulators, and willful securities-law violations. FINRA RULE 8210 requires members and their people to provide information, documents and testimony; refusing usually means a bar. Discipline: FINRA may settle through an AWC (Letter of Acceptance, Waiver and Consent), where the respondent accepts findings without admitting or denying and waives a hearing. Sanctions range from censure and fines to suspension, expulsion or a bar. Disputes go to FINRA arbitration (Code 12000 customer, 13000 industry): binding, very limited appeal.

📈 In the real world

📨 Marco receives an 8210 letter asking for his personal bank statements in an investigation. Embarrassed by unrelated spending, he ignores it. Months later FINRA bars him for failing to cooperate. The underlying matter might have been minor; the refusal was not.

📌 Takeaways

  • Any felony within 10 years is a statutory disqualification
  • Rule 8210: provide information and testimony on request, or face a bar
  • AWC: settle without admitting or denying; arbitration is binding

📖 Terms in this lesson

Statutory disqualification: A status, triggered by events such as a felony conviction within the past 10 years, that bars association with a member firm unless FINRA grants relief.

Rule 8210: FINRA's power to demand information, documents and testimony from members and associated persons.

Letter of acceptance, waiver and consent (AWC): A settlement in which a respondent accepts FINRA's findings and sanctions without admitting or denying them and waives a hearing.

Arbitration: A binding dispute process run by FINRA, used for most disputes between customers, firms and reps.

✅ Test yourself

Which event is a statutory disqualification?
  1. A speeding ticket last month
  2. A personal bankruptcy filing
  3. A felony conviction six years ago
  4. A customer complaint about fees

Answer: C · A felony conviction six years ago

Any felony conviction within 10 years is a statutory disqualification. Bankruptcies and complaints are disclosed on Form U4 but are not disqualifying, and minor traffic tickets are neither.

What usually happens to a person who refuses a FINRA Rule 8210 request?
  1. A permanent bar from the industry
  2. A small fine and a warning
  3. A referral to arbitration
  4. A letter of caution only

Answer: A · A permanent bar from the industry

Failing to provide requested information or testimony under Rule 8210 is treated as a serious violation and typically results in a bar. Arbitration is for disputes, not regulatory investigations.

In a FINRA AWC, the respondent generally:
  1. Admits fraud and pays restitution to FINRA
  2. Appeals directly to a federal district court
  3. Accepts the findings without admitting or denying them
  4. Requests a hearing before a panel of arbitrators

Answer: C · Accepts the findings without admitting or denying them

In a Letter of Acceptance, Waiver and Consent the respondent accepts findings and sanctions without admitting or denying, and waives hearing rights. Arbitration panels hear disputes, not disciplinary settlements.

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