NY Drug Arrests, Brokers-Dealers and Investment Advisers: FINRA, Form U4 and New York Penal Law Article 220 Arrests

While nobody is asserting that financial services professionals, investment advisers, registered representatives or others regulated by the Financial Industry Regulatory Authority (FINRA) are more prone to using, selling or possessing drugs, the reality is that an arrest in New York City or elsewhere for possession of cocaine, heroin, molly, MDMA, or even some prescription drugs can have dire consequences. Sale of these drugs (there need not be money exchanged) can magnify an arrest to a felony regardless of the amount. Simply, if you have a Series 3, Series 6, Series 7, Series 10, Series 11, Series 63, Series 65, Series 66, Series 79, Series 86 or any other securities license, your exposure is more than merely what you will face in a courtroom. Even when you close out your case there may be far reaching implications to your career. Although this blog entry will address the potential crimes and touch on the U4 reporting requirements, in no way is this article a substitute for a consultation with and the retention of a NY criminal defense attorney or criminal defense lawyer. Instead, the content contained here should solely be used as a launch pad to put yourself in the right place and to ask the right questions from your own counsel.

Ranging from the misdemeanor Seventh Degree Criminal Possession of a Controlled Substance (New York Penal Law 220.03) often associated with Desk Appearance Tickets for first time “personal use” arrests to the more serious and felonious “intent to sell” Third Degree Criminal Possession of a Controlled Substance (New York Penal Law 220.16), there are numerous drug crimes scattered throughout the New York Penal Law. While PL 220.03 may only carry up to a one year jail sentence upon conviction and a PL 220.16 mandates a minimum of one year in a New York State prison, there are other crimes sandwiched in between. For example, if your personal use of cocaine involves the possession of 500 milligrams or more, then the crime is a felony of Fifth Degree Criminal Possession of a Controlled Substance (New York Penal Law 220.06). Keep in mind, that while most of these charges involve the “heaver” drugs of ketamine, molly, cocaine, heroin, LSD and even crack-cocaine, illegal possession and sale of prescription drugs will also lead you afoul of the New York Penal Law and both misdemeanor and felony crimes. One important wrinkle to this already confusing area of law… Merely because you are arrested and charged by the police with a particular crime does not mean that the prosecutor who writes up or drafts the case will keep that charge. Although a NYC Desk Appearance Ticket may reflect a “Top Offense Charged: PL 220.03”, in the event you possessed 500 milligrams or more of cocaine your crime is a felony. You wont know whether or not you are charged with this higher crime until you appear in court with your criminal lawyer or your attorney tracks down the case prior to your arraignment. Similarly, if you possess a large quantity of other drugs in terms of multiple bags, glassines, or pills, while you may have intended to use it personally, an Assistant District Attorney may view your possession as intent to sell the same and therefore, a felony (there is a Grand Jury process that is beyond this article).

So what does all of this have to do with a Series 7, Broker-Dealers, U4s and FINRA? Good question…

FINRA Question 14(A)(1) of the U4 is very clear. It asks whether you have ever been charged with any felony. It need not involve fraud. For that matter, what if you are first arrested “only” for a misdemeanor PL 220.03 but it turns out your conduct can be bumped up to a felony (there are other subsections beyond the 500 milligram cocaine felony found in PL 220.06). Maybe you learn of this when you appear for a DAT or the prosecutor who is handling your case has other grounds as you work your way through Central Booking. As such, your arrest is for a misdemeanor but you are later charged with a felony. How does this turn of events get reported on your U4?

Equally concerning, whether or not FINRA requires you to report on your U4, what if your employer mandates that you report an arrest? What will you say? How will you say it? What will you provide them (complaint, certificate of disposition, etc.)? Should you do this on your own or with the advice of counsel? Moreover, in the event you get an ACD or Disorderly Conduct and the record is sealed, is there possibility of exposure? Who can access this information? Are you prepared to address it if it is preserved while it is temporarily public?

Remember, this entry is not a tutorial and should not be construed as advice in your particular case. Instead, the purpose of this entry is to address the direct and collateral consequences of a drug arrest in New York – Manhattan, Brooklyn, Queens, Bronx, Westchester, Rockland or any municipality or county – and questions or issues you should be prepared to deal with in advance both inside and outside the courtroom. In fact, if you are charged with and arrested for a shoplifting crime involving Petit Larceny (PL 155.25) or Criminal Possession of Stolen Property (PL 165.40), or you are charged with a having a drunken dispute with your cab driver and not paying your fare (PL 165.15) your U4 response may be quite different.

To learn about the specific crimes listed or other New York drugs and narcotics crimes, an examination of this blog by searching the legal language (for example, “220.03” or “220.06”), going to the websites listed below or clicking through the links will give you further insight and prepare you to deal with your arrest and consult with your criminal defense attorney.

Crotty Saland PC is a New York criminal defense firm founded by two former Manhattan prosecutors. The New York criminal lawyers at Crotty Saland PC have successfully represented financial services professionals, financial advisers, hedge fund employees, broker-dealers and other financial services professionals both regulated FINRA and otherwise throughout the court of New York City and the region.

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