What legal issues do broker-dealers face?

Broker-dealers face a range of legal and regulatory challenges including: customer complaints and FINRA arbitration claims; FINRA and SEC regulatory investigations and examinations; Wells Notices and enforcement proceedings; state securities regulator investigations; employment disputes with registered representatives including compensation claims, wrongful termination, and non-compete agreements; supervision failures and failure-to-supervise liability; outside business activity issues under FINRA Rule 3270; and complex employment transitions. Bakhtiari & Harrison provides experienced legal counsel across all of these areas.

What is a Wells Notice and how should a broker-dealer respond?

A Wells Notice is a formal notification from the SEC or FINRA that the regulatory staff intends to recommend enforcement action against a broker-dealer or registered person. Receiving a Wells Notice is serious and requires immediate attention from experienced securities counsel. The recipient has the right to submit a Wells Submission — a written response arguing against the proposed enforcement action. The quality of the Wells Submission can significantly affect whether charges are brought and on what terms. Bakhtiari & Harrison has extensive experience advising on Wells Notice responses and regulatory defense strategies.

Broker-Dealer Representation — Bakhtiari & Harrison

Written and reviewed by

Ryan Bakhtiari, Partner — Bakhtiari & Harrison

Admitted: CA | NY | TX | DC | Multiple Federal Courts · Super Lawyers 2005–2026 · Former PIABA President · Former FINRA NAMC Chairman · Last reviewed: April 2026

Bakhtiari & Harrison represents broker-dealers, their officers, directors, registered representatives, and associated persons in regulatory defense, customer disputes, industry disputes, compliance matters, and employment proceedings. Ryan Bakhtiari served as Chairman of the FINRA National Arbitration and Mediation Committee from 2013 to 2017 — the body that writes the rules governing FINRA arbitration and broker-dealer regulatory proceedings. Partner David Harrison is a former Morgan Stanley Dean Witter in-house counsel with direct institutional experience defending a major broker-dealer against customer and regulatory claims. Financial professional and firm cases are handled on a flat fee or hourly basis. Initial consultations are free.

Legal representation for broker-dealers and their personnel

Broker-dealers face a complex and demanding regulatory environment — subject to FINRA rules, SEC regulations, state securities laws, and the full range of federal financial services statutes. Legal exposure arises from customer complaints, regulatory examinations, FINRA enforcement proceedings, industry disputes, and the employment and compensation matters that arise in any large financial services organization.

Bakhtiari & Harrison brings two specific credentials that distinguish it from general securities defense counsel: Ryan Bakhtiari’s service as FINRA NAMC Chairman gives the firm direct institutional knowledge of how FINRA writes its rules and how enforcement proceedings are structured. David Harrison’s years as Morgan Stanley in-house counsel give the firm first-hand experience defending a major broker-dealer against customer claims and regulatory actions.

Broker-dealer practice areas

FINRA regulatory defense

FINRA has broad authority to examine and discipline its member firms. When a FINRA examination reveals potential violations — or when a formal investigation is opened — Bakhtiari & Harrison provides regulatory defense at every stage: responding to Rule 8210 requests, negotiating with FINRA enforcement staff at the Wells Notice stage, and defending in formal disciplinary proceedings. Ryan Bakhtiari’s service as FINRA NAMC Chairman gives the firm direct knowledge of how FINRA enforcement staff approach these matters and what resolution paths are available.

Customer dispute defense

Customer claims against broker-dealers are pursued primarily through FINRA arbitration. Bakhtiari & Harrison defends broker-dealers and their registered representatives in FINRA arbitration proceedings involving all categories of investor claims — suitability violations, misrepresentation, unauthorized trading, churning, overconcentration, failure to supervise, and product failure. The firm’s experience representing both investors and broker-dealers gives it comprehensive knowledge of how these cases are built and defended. For more on the investor-side practice, see the Advisor Misconduct page.

Failure to supervise defense

Brokerage firms face independent liability under FINRA Rule 3110 for failing to detect or prevent misconduct by their registered representatives. Failure to supervise claims are among the most significant in terms of potential damages because they can make the firm liable for the actions of every registered representative it employs. Bakhtiari & Harrison defends broker-dealers in failure to supervise proceedings, drawing on deep knowledge of how FINRA evaluates supervisory systems and what constitutes adequate compliance infrastructure.

Industry disputes

Broker-dealers frequently face disputes with other industry participants — correspondent firms, clearing firms, custodians, technology vendors, and other counterparties. Bakhtiari & Harrison handles these intra-industry disputes in FINRA arbitration, AAA arbitration, and court.

Employment and compensation matters

Broker-dealers face employment claims from current and former registered representatives — wrongful termination, discrimination, compensation disputes, and promissory note defense on both sides of the table. Bakhtiari & Harrison represents broker-dealers in employment matters as well as the financial professionals who bring claims against them. Visit the Employment Disputes and Compensation Disputes pages.

Why the firm’s dual perspective matters

Most securities defense firms represent either broker-dealers or investors — rarely both at the highest level. Bakhtiari & Harrison’s practice on both sides of the table gives it a direct understanding of how investor claims are built, what evidence matters, and what arguments are most persuasive — knowledge that is invaluable when defending broker-dealers against those same claims. Ryan Bakhtiari’s FINRA leadership role and David Harrison’s Morgan Stanley in-house experience reinforce this dual perspective at the institutional level.

Frequently asked questions — broker-dealer representation

What is a FINRA Rule 8210 request and how should a broker-dealer respond?

FINRA Rule 8210 gives FINRA broad authority to require broker-dealers and their associated persons to provide documents, records, and testimony in connection with any examination, complaint, investigation, or proceeding. Failure to respond fully and timely can result in sanctions up to and including a bar from the industry. Responses to 8210 requests require careful review — over-disclosure can create additional exposure, while under-disclosure is itself a violation. Bakhtiari & Harrison advises broker-dealers on 8210 responses and manages the submission process. Broker-Dealer Representation

What happens at a Wells Notice stage in a FINRA proceeding?

A Wells Notice is FINRA’s formal notification that it is considering charges against a broker-dealer or registered person, and an invitation to submit a written response (Wells submission) before formal proceedings are filed. A strong Wells submission can resolve the matter without formal charges or result in significantly reduced sanctions. Bakhtiari & Harrison handles Wells submissions with the specific knowledge of FINRA enforcement priorities and settlement practices that comes from Ryan Bakhtiari’s institutional experience.

Can a broker-dealer be liable for its registered representative’s misconduct?

Yes. Broker-dealers face independent liability under FINRA Rule 3110 for failing to supervise their registered representatives. Even if the firm did not participate in the misconduct, inadequate supervisory systems can make the firm fully liable for investor losses caused by a rogue representative. Bakhtiari & Harrison defends broker-dealers in failure to supervise proceedings and advises firms on building compliance programs that satisfy FINRA’s supervisory requirements.

Contact a broker-dealer defense attorney — free consultation

Contact Bakhtiari & Harrison for a free, confidential consultation. Our FINRA attorneys review every potential matter at no charge.

Financial professional cases are handled on a flat fee or hourly basis. Initial consultations are free.

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