By: David J. Morris & Ross O. Kloeber IV
On June 30, 2026, FINRA published the results of an independent review of its enforcement program, conducted by Professor Paul R. Eckert of William & Mary Law School and former SEC Commissioner Troy A. Paredes (the “Eckert-Paredes Report”) as part of the FINRA Forward initiative. The reviewers issued 24 recommendations, and FINRA CEO Robert Cook has publicly committed to drawing on them to reshape the enforcement program. Taken together, the recommendations point toward a meaningfully more transparent, structured, and respondent-friendly enforcement process, and several changes are already in effect.
Why This Matters
FINRA enforcement has long been criticized for opacity: no limitations period, broad Rule 8210 information-request authority with no formal avenue to challenge scope or burden, and limited visibility into how charging and sanctions decisions are made.
The Eckert-Paredes Report addresses each of these concerns directly. Implementation will take time because FINRA is simultaneously restructuring its regulatory operations. But, the direction of travel is clear, and member firms, issuers, and associated key persons facing examinations or investigations should understand what is likely coming.
The Most Consequential Recommendations
- Limitations periods for enforcement actions. FINRA currently operates without any statute of limitations; the only constraint is a vague “inherently unfair delay” standard drawn from SEC precedent. The reviewers recommend that FINRA adopt defined limitations periods that track the corresponding federal periods where charges are grounded in the securities laws, with a default five-year limit for other matters and modestly longer periods for scienter-based fraud involving customer loss. If adopted, this would be one of the most significant structural changes to FINRA enforcement in years.
- A forum to challenge Rule 8210 requests. The report proposes a neutral-decisionmaker mechanism, modeled loosely on subpoena challenges under Federal Rule of Criminal Procedure 17(c), allowing firms to contest information requests perceived as overbroad or unduly burdensome. It also recommends pre-issuance consultation on scope and timing, senior-level approval of requests, centralized tracking to eliminate duplicative requests, and express limits on using Rule 8210 requests as de facto contention interrogatories or to probe privileged material.
- Expanded due process throughout the enforcement lifecycle. The recommendations contemplate written notice at the time of referral identifying assigned staff and potential violations, a structured opportunity to engage on the merits before a matter takes final shape, “reverse proffers,” access to all on-the-record testimony transcripts and exhibits upon issuance of a Wells Notice, minimum 30-day Wells Notice response deadlines, and required explanations of charging decisions, sanctions rationale, and cooperation credit determinations.
- Curbing “tag-along” Rule 2010 charges. The reviewers recommend limiting the practice of adding a Rule 2010 (commercial honor) charge to technical rule violations that do not involve genuinely unethical conduct. The Ecker-Paredes Report reasoned that reflexive Rule 2010 charges overstate moral culpability, confuse customers and other regulators about the severity of the conduct, and dilute the charge’s significance where it is genuinely warranted.
- Governance and transparency reforms. Other recommendations include enhanced CEO involvement in specific matters before resolution, reconsidering the National Adjudicatory Council’s delegation of settlement review to the Office of Disciplinary Affairs, publication of a public-facing Enforcement Manual and enforcement workflows, cooperation credit that no longer requires “extraordinary” cooperation, an expanded Minor Rule Violation Plan with updated fine levels, and greater discipline in applying the Sanction Guidelines to settlements. Such could include the use of documented and approved departures and less reliance on prior negotiated settlements as “precedent.”
What Is Already in Effect
Firms with current or potential FINRA exposure do not need to wait for rulemaking to benefit from several of the recommendations.
FINRA has already implemented: introductory “kickoff” meetings with enforcement staff at the time of referral, status updates at least every 90 days, a pre-complaint meeting where FINRA’s enforcement staff shares its investigative findings and evidence before proposing formal action, a 30-calendar-day standard Wells Notice response period, and advance engagement before FINRA issues any Cautionary Action Letters (“CAL”) or Rule 8210 requests.
FINRA members, issuers, and associated key persons should be affirmatively invoking these procedures now. They create real opportunities to shape FINRA enforcement staff’s view of a matter early, narrow the scope of information requests, and advocate for resolution short of formal action.
The Bottom Line
FINRA has signaled a shift toward a more transparent and procedurally rigorous enforcement model. Firms and registered people navigating examinations, investigations, or Wells Notice should ensure their response strategy takes full advantage of the procedural tools already available — and should watch closely as FINRA translates the remaining recommendations into rules, policies, and its forthcoming Enforcement Manual.
If you have questions about FINRA enforcement matters or how these developments may affect your business, please contact David J. Morris ([email protected] | 312-224-1229) or Ross O. Kloeber ([email protected] | 312-224-1218).
David J. Morris
David Morris is a capital partner and Chair of the Corporate & Securities Group. David practices in the areas of corporate and securities, corporate finance and investment management. David concentrates his practice on mergers and acquisitions, private equity, venture capital, fund formation, securities, banking and finance, trading and commodities law, emerging growth companies and general corporate matters. He also serves as outside general counsel to start-up, emerging growth and middle market companies in a wide variety of industries. David has significant experience in investment management and proprietary trading and represents private investment funds (hedge funds, private equity funds, venture capital funds and real estate funds), broker-dealers, registered investment advisers, proprietary trading firms and other investment management and proprietary trading industry participants.
Ross O. Kloeber IV
Ross Kloeber is an associate in the firm’s Litigation Group. He has experience representing both defendants and plaintiffs in a variety of complex civil litigation in state and federal courts at both the trial and appellate levels, with a particular focus on securities, shareholder, and corporate governance issues. Ross focuses his practice on complex civil litigation in state and federal courts, at both the trial and appellate levels. He has particular experience with securities, shareholder, and corporate governance disputes, including those arising out of mergers and acquisitions and other high-value transactions. Ross has represented clients in a range of industries including the financial services and life sciences industries. He has broad experience litigating complex commercial disputes, including at trial. In addition, he advises clients facing regulatory and enforcement scrutiny, including investigations by the SEC, DOJ, FINRA, state financial services regulators and other self-regulatory organizations (SROs).
This article contains material of general interest and should not be construed as legal advice or a legal opinion on any specific facts or circumstances. Under applicable rules of professional conduct, this content may be regarded as attorney advertising.