Litigation Preparation Checklist

Open a matter file in NetDocuments or Laserfiche; record the demand letter, FINRA Wells notice, SEC subpoena, or arbitration claim that triggered the workflow. Assign the CCO or designated supervisor as the single point of contact for all related communications.

Send a written hold notice to all custodians whose records may be relevant — registered reps, OSJ supervisors, ops, IT, branch managers. Suspend any auto-deletion in Microsoft Purview, Smarsh, Global Relay, or Bloomberg Vault. Spoliation sanctions for failing to preserve are a frequent finding in SEC enforcement.

Retain securities-litigation counsel and confirm the engagement letter covers Kovel arrangements if accountants or e-discovery vendors will be brought under privilege. Distribute privilege-tag conventions for email and document review.

Map custodians to systems: CRM (Salesforce FSC, Wealthbox, Redtail), portfolio platform (Black Diamond, Orion, Tamarac, Addepar), custodian (Schwab, Fidelity, Pershing), email/text archive (Smarsh, Global Relay, MyRepChat), and any planning software (eMoney, MoneyGuidePro). Off-channel comms on personal devices is the single most common SEC finding from 2022–2024.

Export advisory agreements, Form ADV deliveries, Form CRS deliveries with acknowledgments, supervisory review logs, advertising approvals (Rule 2210 / 206(4)-1), trade blotters, and fee invoices for the relevant period. The five-year retention requirement under 204-2 sets the floor for production scope.

Tag attorney-client and work-product material; flag NPI subject to Reg S-P that requires redaction or a protective order before production. Coordinate with outside counsel on a clawback agreement under FRE 502(d) to limit waiver risk.

Tie each allegation to the underlying conduct — Reg BI Care Obligation breach, suitability under FINRA 2111, custody rule 206(4)-2, advertising rule 206(4)-1, or supervisory failure under FINRA 3110. Note which IARs or registered reps are named.

Compare the cost of an AWC (FINRA Letter of Acceptance, Waiver and Consent), an SEC settled order, or arbitration settlement against the cost of a contested hearing. Factor in CRD/IARD reportability, Form U4 amendments, and statutory disqualification risk.

Include the named rep or IAR, the supervising principal, the CCO, the CIO if investment selection is at issue, and any client service associate who handled the account. Note Upjohn warnings will be required for any employee interview.

Outside counsel delivers the Upjohn warning (counsel represents the firm, not the individual; firm controls privilege). Memorialize the warning in the interview memo. Skipping this is a frequent malpractice claim and can compromise privilege.

Run mock-Q sessions covering the trade rationale, supervisory reviews actually performed, and the relevant ADV / Form CRS disclosures the witness delivered. For SEC On-The-Record testimony, brief the witness on the Form 1662 rights and the no-coaching-during-breaks rule.

Customer complaints alleging $5,000+ damages, regulatory actions, and certain investigations trigger U4 disclosure within 30 days. Form ADV Item 11 disclosure is also affected. Late or missed CRD disclosures are themselves a separate FINRA violation.

Submit U4 amendments via CRD and ADV amendments via IARD within the 30-day deadline. Cross-check against state notice-filing jurisdictions for any additional filings.

Revise the Written Supervisory Procedures or compliance manual to close any control gaps the matter exposed — off-channel comms, advertising pre-approval, suitability documentation, custody SLOA safeguards. Examiners reward visible remediation.