WealthManagement Magazine

Legal Corner: On the Mark in On-the-Record Interviews

SRO examiners have invited you to give on-the-record (OTR) testimony during an interview in connection with a pending inquiry, investigation or disciplinary proceeding. You may be the target or serve as a potential witness against others. In almost all instances, you have nothing to gain and much to lose from this exercise. Your overall objective is simple and conservative. First, make no unnecessary

SRO examiners have invited you to give on-the-record (OTR) testimony during an interview in connection with a pending inquiry, investigation or disciplinary proceeding.

You may be the target or serve as a potential witness against others. In almost all instances, you have nothing to gain and much to lose from this exercise.

Your overall objective is simple and conservative. First, make no unnecessary admissions against your interest. Second, make no material misstatements. Here are tips to help you survive the minefield of an OTR interview:

Dos and Don’ts

Stay alert throughout the proceeding, particularly during the late stages when fatigue can affect your testimony. OTR interviews can be exhausting and tedious.

Do not think out loud. If you are shown documents, review them in silence. If you need to speak to counsel, do so outside the presence of examiners.

Do not attempt to make “off-the-record” statements. No matter how polite or friendly the examiners may seem, they are not your confidants. In fact, examiners are often delighted if you make statements that incriminate you or others.

Answer properly framed, relevant questions truthfully, succinctly and to the best of your ability. Less is almost always more. Brief, precise answers definitively stated will shorten the time spent and are less likely to inspire additional inquiry. You are not obligated to volunteer information or otherwise gratuitously enlighten the examiners.

Be honest. SROs consistently impose severe penalties on witnesses who are found to have made an intentional, material misstatement. A misstatement will be used to impeach your credibility on all issues and is very damaging to your defense.

Avoid saying ever or never. Phrases such as “to the best of my knowledge” or “to the best of my recollection” are appropriate and enable you to gracefully back away from unintentional errors in your testimony.

Don’t guess or speculate. Provide answers of “I don’t know” or “I don’t recall” if true. And do not be defensive if you don’t know the answer or cannot recall something. Never permit yourself to be bullied into admitting something unless you are certain that it is true.

Don’t fill pregnant pauses with your words. After you have given your answer, wait for the next question with your mouth closed.

Listen carefully to each question. Do not answer a question that has not been asked. Do not answer a question if you are confused about it.

Think twice before making a statement. Generally, at the conclusion of the OTR, your counsel may ask you clarifying questions and you have an opportunity to make a statement. It is rarely advisable to do either. This provokes examiners into additional questions and will probably not exculpate you, as intended. Save additional information for a letter from your counsel.

Remember, if this were a game, you would have “lost” when you received the notice to testify. Accept that this is a no-win situation. A witness who completes an OTR without making a material misstatement or an unnecessary admission has testified successfully.

Sidebar: What is an OTR?

An on-the-record (OTR) interview is a formal question-and-answer session, conducted by members of an SRO's regulatory staff and recorded verbatim by a stenographer. Although the examiners may tell you they have summoned you to gather facts, the primary purpose of an OTR is to preserve your testimony for future reference, including use against you or others.

Examiners are not impartial or unbiased. By the time you are called to give an OTR, they have developed a theory of the case and have made or are close to making conclusions of guilt or innocence. However, examiners are usually not the officials who decide whether to take disciplinary action against you or others.

Thomas J. McCabe is a partner at New York-based McCabe & Flynn, LLP, and has been practicing in the securities regulation area since 1981. Associate Steven Cunningham contributed to this article.

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