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  • 9260. Hearing and Decision

    • 9261. Evidence and Procedure in Hearing

      (a) Submission of Documentary Evidence and List of Witnesses Before Hearing
      No later than ten days before the hearing, or at such earlier date as may be specified by the Hearing Officer, each Party shall submit to all other Parties and to the Hearing Officer copies of documentary evidence and the names of the witnesses each Party intends to present at the hearing. The documentary evidence submitted by the Parties prior to the hearing pursuant to this paragraph shall not become part of the record, unless the Hearing Officer, Hearing Panel, or Extended Hearing Panel orders some or all of it included pursuant to Rule 9267(a)(8). The Hearing Officer may order each Party to refrain from submitting its documentary evidence to the Hearing Officer.
      (b) Party's Right to Be Heard
      If a hearing is held, a Party shall be entitled to be heard in person, by counsel, or by the Party's representative.
      (c) Request to Submit Additional Evidence
      Notwithstanding paragraph (a), a Party, for good cause shown, may seek to submit any additional evidence at the hearing as the Hearing Officer, in his or her discretion, determines may be relevant and necessary for a complete record.
      Amended by SR-FINRA-2011-044 eff. Mar. 30, 2012.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

      Selected Notices: 08-57, 12-12.

    • 9262. Testimony

      A person who is subject to the jurisdiction of FINRA shall testify under oath or affirmation. The oath or affirmation shall be administered by a court reporter or a notary public.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

      Selected Notice: 08-57.

    • 9263. Evidence: Admissibility

      (a) Criteria for Receiving and Excluding Evidence
      The Hearing Officer shall receive relevant evidence, and may exclude all evidence that is irrelevant, immaterial, unduly repetitious, or unduly prejudicial.
      (b) Objections
      Objections to the admission or exclusion of evidence shall be made on the record and shall succinctly state the grounds relied upon. Excluded material shall be deemed a supplemental document, which shall be attached to the record and retained under Rule 9267.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

      Selected Notice: 08-57.

    • 9264. Motion for Summary Disposition

      (a) Pre-hearing
      After a Respondent's answer has been filed and Documents have been made available to that Respondent for inspection and copying pursuant to Rule 9251, the Respondent or the Department of Enforcement, without leave of the Hearing Officer, may make a motion for summary disposition of any or all the causes of action in the complaint with respect to that Respondent, as well as any defense raised in a Respondent's answer. All pre-hearing motions for summary disposition and supporting papers shall be filed at least 21 days before the time set for the hearing, or at such earlier time as ordered by the Hearing Officer. Notwithstanding the provisions of Rule 9146(d), any opposition or response to a pre-hearing motion for summary disposition shall be filed at least seven days before the time set for the hearing.
      (b) After Commencement of Hearing on Merits
      After a hearing on the merits has commenced, a Respondent or the Department of Enforcement may make a motion for summary disposition of any or all of the causes of action in the complaint with respect to that Respondent or defenses raised in that Respondent's answer only with leave of the Hearing Officer.
      (c) Case Not Fully Adjudicated on Motion
      If on motion under this rule a decision is not rendered upon the whole case or for all the relief asked and a hearing is necessary, the Hearing Panel or, if applicable, the Extended Hearing Panel, at the hearing of the motion, by examining the pleadings and the evidence before it and by questioning counsel, shall, if practicable, ascertain what material facts exist without substantial controversy and what material facts are actually and in good faith controverted. It shall thereupon make an order specifying the facts that appear without substantial controversy, and directing such further proceedings in the action as are just. Upon the hearing of the action the facts so specified shall be deemed established, and the hearing shall be conducted accordingly.
      (d) Form of Papers
      A motion for summary disposition pursuant to paragraph (a) shall be accompanied by the following: a statement of undisputed facts; a supporting memorandum of points and authorities; and affidavits or declarations that set forth such facts as would be admissible at the hearing and show affirmatively that the affiant is competent to testify to the matters stated therein. A memorandum of points and authorities in support or opposition shall not exceed 35 pages.
      (e) Rulings on Motion
      The Hearing Officer may promptly deny or defer decisions on any motion for summary disposition, however, only the Hearing Panel or, if applicable, the Extended Hearing Panel, may grant a motion for summary disposition, except the Hearing Officer may grant motions for summary disposition with respect to questions of jurisdiction. The Hearing Panel or, if applicable, the Extended Hearing Panel, may grant the motion for summary disposition if there is no genuine issue with regard to any material fact and the Party that files the motion is entitled to summary disposition as a matter of law. If a Party files a motion under paragraph (a), the facts alleged in the pleadings of the Party against whom the motion is made shall be taken as true, except as modified by stipulations or admissions made by the non-moving Party, by uncontested affidavits or declarations, or by facts officially noticed pursuant to Rule 9145. If a Party opposing a motion for summary disposition made under paragraph (a) cannot present, by affidavit prior to the hearing, facts essential to justify the Party's opposition to the motion, the Hearing Panel or, if applicable, the Extended Hearing Panel, may deny the motion for summary disposition or defer the decision on the motion.
      Amended by SR-FINRA-2018-027 eff. Aug. 3, 2018.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-99-76 eff. Sept. 11, 2000.
      Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

      Selected Notices: 00-56, 08-57.

    • 9265. Record of Hearing

      (a) Recordation
      A hearing shall be recorded by a court reporter and a transcript shall be prepared. Unless otherwise ordered by a Hearing Officer, a pre-hearing conference shall be recorded by a court reporter and a transcript shall be prepared.
      (b) Availability of a Transcript
      A transcript of a pre-hearing conference and a transcript of a hearing shall be available to a Party for purchase from the court reporter at prescribed rates. A witness may purchase from the court reporter a transcript of his or her own testimony.
      (c) Transcript Correction
      Prior to the filing of post-hearing briefs or proposed findings and conclusions, or within such earlier time as ordered by the Hearing Officer, a Party or witness may seek to correct his or her transcript. A proposed correction of the transcript shall be submitted to the Hearing Officer by affidavit. Upon notice to all Parties to the disciplinary proceeding, the Hearing Officer may order the correction to the transcript as requested or sua sponte.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

      Selected Notice: 08-57.

    • 9266. Proposed Findings of Fact, Conclusions of Law, and Post-Hearing Briefs

      (a) Discretion of Hearing Officer to Require Proposed Findings of Fact, Conclusions of Law, and Post-Hearing Briefs
      At the discretion of the Hearing Officer, the Parties may be ordered to file proposed findings of facts and conclusions of law, or post-hearing briefs, or both. The Hearing Officer may order that such proposed findings and conclusions be filed together with, or as part of, post-hearing briefs.
      (b) Reference to Record Required
      Proposed findings of fact or other statements of fact in briefs shall be supported by specific references to the record.
      (c) Period for Filing
      In any case in which the Hearing Officer ordered the filing of proposed findings or conclusions of law, or post-hearing briefs, the Hearing Officer shall, after consultation with the Parties, prescribe the period within which proposed findings and conclusions of law and post-hearing briefs are to be filed. Such period shall be reasonable under all the circumstances but the total period allowed for the filing of post-hearing submissions shall not exceed 60 days after the conclusion of the hearing unless the Hearing Officer, for good cause shown, permits a different period and sets forth in an order the reasons why a longer period is necessary.
      (d) Form, Length of Papers
      Unless the Hearing Officer orders otherwise, each post-hearing submission shall not exceed 25 pages, exclusive of cover sheets, tables of contents, and tables of authorities.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

      Selected Notice: 08-57.

    • 9267. Record; Supplemental Documents Attached to Record; Retention

      (a) Contents of the Record, Retention
      The record shall consist of:
      (1) the complaint, answers, each notice of hearing, pre-hearing order, and any amendments thereto;
      (2) each application, motion, submission, and other paper, and any amendments, motions, objections, and exceptions to or regarding them;
      (3) each transcript of a pre-hearing conference and of a hearing, and each stipulation, transcript of testimony, Document, and other item admitted into evidence;
      (4) each written communication accepted at the discretion of the Hearing Officer;
      (5) with respect to a motion to disqualify a Hearing Officer under Rule 9233 or a Panelist under Rule 9234, each affidavit or transcript of testimony taken and the ruling made in connection with the request;
      (6) all proposed findings and conclusions;
      (7) each written ruling, order, and decision issued by the Chief Hearing Officer, Hearing Officer, Hearing Panel or, if applicable, Extended Hearing Panel; and,
      (8) any other Document or item accepted into the record by the Hearing Officer, the Hearing Panel or, if applicable, the Extended Hearing Panel.
      (b) Supplemental Documents Attached To Record; Retention
      (1) A supplemental Document attached to the record is any Document submitted to the Hearing Officer that did not become part of the record, including:
      (A) a Document not admitted by the Hearing Officer, Hearing Panel or, if applicable, the Extended Hearing Panel;
      (B) any matter stricken from any filing or stricken during an oral presentation, including any matter stricken from any filing or stricken during any oral presentation because the Adjudicator determined it was scandalous or impertinent as provided in Rule 9136(e); and
      (C) a list of Documents, if any, that a Respondent unsuccessfully sought by motion to inspect and copy under Rule 9251(c).
      (2) A supplemental Document attached to the record shall not constitute part of the record, but shall be retained until the date upon which FINRA's decision becomes final disciplinary action or, if applicable, upon the conclusion of any review by the SEC or the federal courts.
      (c) Substitution of Copies
      Parties may submit to the Hearing Officer for substitution a true copy of a Document in the record.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

      Selected Notice: 08-57.

    • 9268. Decision of Hearing Panel or Extended Hearing Panel

      (a) Majority Decision
      Within 60 days after the final date allowed for filing proposed findings of fact, conclusions of law, and post-hearing briefs, or by a date established at the discretion of the Chief Hearing Officer, the Hearing Officer shall prepare a written decision that reflects the views of the Hearing Panel or, if applicable, the Extended Hearing Panel, as determined by majority vote.
      (b) Contents of Decision
      The decision shall include:
      (1) a statement describing the investigative or other origin of the disciplinary proceeding, if not otherwise contained in the record;
      (2) the specific statutory or rule provisions that were alleged to have been violated;
      (3) a statement setting forth the findings of fact with respect to any act or practice the Respondent was alleged to have committed or omitted;
      (4) the conclusions of the Hearing Panel, or Extended Hearing Panel, as to whether the Respondent violated any provision alleged in the complaint;
      (5) a statement of the Hearing Panel, or the Extended Hearing Panel, in support of the disposition of the principal issues raised in the proceeding;
      (6) a statement describing any sanction imposed, the reasons therefor, and the date upon which such sanction shall become effective. Unless otherwise provided in the decision, the sanction(s) shall become effective pursuant to paragraph (f) of this Rule; and
      (7) a statement, when the sanctions include a permanent cease and desist order, that is consistent with the requirements of Rule 9291(a) concerning the content, scope, and form of a permanent cease and desist order.
      (c) Dissenting Opinion
      Within 65 days after the final date allowed for filing proposed findings of fact and conclusions of law, and post-hearings briefs, or by a date established at the discretion of the Chief Hearing Officer, the Hearing Officer or any Panelist may prepare a written dissenting opinion.
      (d) Service, Notice, and Dissemination Requirements
      The Office of Hearing Officers shall promptly serve the decision of the Hearing Panel, or the Extended Hearing Panel, and any dissenting opinion on the Parties; publish notice of the decision and any dissenting opinion in the Central Registration Depository; and provide a copy of the decision and any dissenting opinion to each FINRA member with which a Respondent is associated.
      (e) Appeal or Review
      If not timely appealed pursuant to Rule 9311 or timely called for review pursuant to Rule 9312, the majority decision shall constitute final disciplinary action of FINRA for purposes of SEA Rule 19d-1(c)(1).
      (f) Effectiveness of Sanctions
      Unless otherwise provided in the majority decision issued under paragraph (a) of this Rule:
      (1) a sanction (other than a bar or an expulsion) specified in a decision constituting final disciplinary action of FINRA for purposes of SEA Rule 19d-1(c)(1) shall become effective on a date to be determined by FINRA; and
      (2) a bar or an expulsion specified in a decision shall become effective immediately upon the decision becoming the final disciplinary action of FINRA for purposes of SEA Rule 19d-1(c)(1).
      Amended by SR-FINRA-2015-019 eff. Nov. 2, 2015.
      Amended by SR-FINRA-2013-018 eff. Dec. 16, 2013.
      Amended by SR-FINRA-2011-044 eff. Mar. 30, 2012.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-99-76 eff. Sept. 11, 2000.
      Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

      Selected Notices: 00-56, 08-57, 12-12, 13-27, 15-35.

    • 9269. Default Decisions

      (a) Issuance of Default Decisions
      (1) The Hearing Officer may issue a default decision against a Respondent that fails to answer the complaint within the time afforded under Rule 9215, or a Party that fails to appear at a pre-hearing conference held pursuant to Rule 9241 of which the Party has due notice, or a Party that fails to appear any hearing that a Party is required to attend under the Rule 9200 Series of which the Party has due notice.
      (2) If the defaulting Party is the Respondent, the Hearing Officer may deem the allegations against that Respondent admitted. If the Defaulting Party is the Department of Enforcement, the Hearing Officer may issue a default decision ordering that the complaint be dismissed with prejudice.
      (3) The Hearing Officer may order a Party that fails to appear at the pre-hearing conference or the hearing to pay the costs incurred by other Parties in connection with their appearance.
      (4) The Office of Hearing Officers shall provide a copy of the default decision to each FINRA member with which a Respondent is associated.
      (b) Contents of Decision
      The contents of a default decision shall conform to the requirements of Rule 9268(b).
      (c) Review of Default Decision
      Party may, for good cause shown, file a motion to set aside a default, dismissal, and the imposition of costs. Upon a showing of good cause, the Hearing Officer that entered the original order shall decide the motion. If the Hearing Officer that issued the original order is not available, the Chief Hearing Officer shall appoint another Hearing Officer to decide the motion.
      (d) Final Disciplinary Action of FINRA; Effectiveness of Sanctions
      If a default decision is not appealed pursuant to Rule 9311 or called for review pursuant to Rule 9312 within 25 days after the date the Office of Hearing Officers serves it on the Parties, the default decision shall become the final disciplinary action of FINRA for purposes of SEA Rule 19d-1(c)(1). Unless otherwise provided in the default decision, the sanctions shall become effective on a date to be determined by FINRA staff, except that a bar or expulsion shall become effective immediately upon the default decision becoming the final disciplinary action of FINRA. FINRA shall serve the decision on a Respondent by courier, facsimile or other means reasonably likely to obtain prompt service when the sanction is a bar or an expulsion.
      Amended by SR-FINRA-2018-027 eff. Aug. 3, 2018.
      Amended by SR-FINRA-2015-019 eff. Nov. 2, 2015.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-99-76 eff. Sept. 11, 2000.
      Amended by SR-NASD-98-58 eff. March 26, 1999.
      Amended by SR-NASD-98-57 eff. March 26, 1999.
      Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

      Selected Notices: 99-16, 00-56, 08-57, 15-35.