BackText onlyPrint

You need the Flash plugin.

Download Macromedia Flash Player



  • 9200. DISCIPLINARY PROCEEDINGS

    • 9210. Complaint and Answer

      • 9211. Authorization of Complaint

        (a) Complaint

        (1) If the Department of Enforcement believes that any FINRA member or associated person is violating or has violated any rule, regulation, or statutory provision, including the federal securities laws and the regulations thereunder, which FINRA has jurisdiction to enforce, the Department of Enforcement may request authorization from the Office of Disciplinary Affairs to issue a complaint.
        (2) The FINRA Regulation Board and the FINRA Board each shall have the authority to direct the Office of Disciplinary Affairs to authorize and the Department of Enforcement to issue a complaint when, on the basis of information and belief, either of such boards is of the opinion that any FINRA member or associated person is violating or has violated any rule, regulation, or statutory provision, including the federal securities laws and the regulations thereunder, which FINRA has jurisdiction to enforce.
        (b) Commencement of Disciplinary Proceeding
        A disciplinary proceeding shall begin when the complaint is served and filed.
        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.
        Amended by SR-NASD-98-90 eff. Jan. 1, 1999.
        Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
        Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

        Selected Notices: 99-01; 00-56, 08-57.

      • 9212. Complaint Issuance — Requirements, Service, Amendment, Withdrawal, and Docketing

        (a) Form, Content, Notice, Docketing, and Service

        (1) If a complaint is authorized, the Department of Enforcement shall issue the complaint. Each complaint shall be in writing and signed by the Department of Enforcement. The complaint shall specify in reasonable detail the conduct alleged to constitute the violative activity and the rule, regulation, or statutory provision the Respondent is alleged to be violating or to have violated. If the complaint consists of several causes of action, each cause shall be stated separately. Complaints shall be served by the Department of Enforcement on each Party pursuant to Rules 9131 and 9134, and filed at the time of service with the Office of Hearing Officers pursuant to Rules 9135, 9136, and 9137.
        (2) At the time of issuance of a complaint, the Department of Enforcement may propose:

        (A) an appropriate location for the hearing; and
        (B) if the complaint alleges at least one cause of action involving a violation of a statute or a rule described in Rule 9120 (u), that the Chief Hearing Officer select a Market Regulation Committee Panelist for the Hearing Panel, or, if applicable, the Extended Hearing Panel as described in Rule 9231.
        (b) Amendments to Complaint
        The Department of Enforcement may file and serve an amended complaint once as a matter of course at any time before the Respondent answers the complaint. Otherwise, upon motion by the Department of Enforcement, the Hearing Officer may permit the Department of Enforcement to amend the complaint, including amendments so as to make the complaint conform to the evidence presented, after considering whether the Department of Enforcement has shown good cause for the amendment and whether any Respondent will suffer any unfair prejudice if the amendment is allowed. Amendments to complaints will be freely granted when justice so requires.
        (c) Withdrawal of Complaint
        With prior leave of the Hearing Officer, the Department of Enforcement may withdraw a complaint. If the Department of Enforcement withdraws the complaint before the earlier of (1) the Hearing Panel's or, if applicable, the Extended Hearing Panel's, issuance of a ruling on a motion for summary disposition, or (2) the start of the hearing on the merits, the withdrawal of the complaint by the Department of Enforcement shall be without prejudice and the Department of Enforcement shall be permitted to refile a case based on allegations concerning the same facts and circumstances that are set forth in the withdrawn complaint. If the Department of Enforcement requests to withdraw such complaint after the occurrence of either of the two events set forth in (1) and (2) in this paragraph, the Hearing Panel or, if applicable, the Extended Hearing Panel, after considering the facts and circumstances of the request, shall determine whether the withdrawal shall be granted with prejudice.
        (d) Disciplinary Proceeding Docket
        The Office of Hearing Officers shall promptly record each complaint filed with it in FINRA's disciplinary proceeding docket, and record in the disciplinary proceeding docket each event, filing, and change in the status of a disciplinary proceeding.
        Amended by SR-FINRA-2019-009 eff. May 3, 2019.
        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.
        Amended by SR-NASD-98-57 eff. March 26, 1999.
        Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
        Amended by SR-NASD-97-28 eff. Aug. 7, 1997.

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

      • 9213. Assignment of Hearing Officer and Appointment of Panelists to Hearing Panel or Extended Hearing Panel

        (a) Assignment of Hearing Officer
        As soon as practicable after the Department of Enforcement has filed a complaint with the Office of Hearing Officers, the Chief Hearing Officer shall assign a Hearing Officer to preside over the disciplinary proceeding and shall serve the Parties with notice of the Hearing Officer's assignment pursuant to Rule 9132.
        (b) Appointment of Panelists
        As soon as practicable after assigning a Hearing Officer to preside over a disciplinary proceeding, the Chief Hearing Officer shall appoint Panelists pursuant to Rules 9231 and 9232 to a Hearing Panel or, if the Chief Hearing Officer determines that an Extended Hearing Panel should be appointed, to an Extended Hearing Panel.
        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.
        Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
        Amended by SR-NASD-97-28 eff. Aug. 7, 1997.
        Amended eff. Oct. 18, 1990.

        Selected Notices: 00-56, 08-57.

      • 9214. Consolidation or Severance of Disciplinary Proceedings

        (a) Consolidation Initiated by Chief Hearing Officer
        The Chief Hearing Officer may order the consolidation of two or more disciplinary proceedings, upon his or her own motion, under circumstances where such consolidation would further the efficiency of the disciplinary process, and where the subject complaints involve common questions of law or fact, or one or more of the same Respondents. In determining whether to order the consolidation of such disciplinary proceedings, the Chief Hearing Officer shall consider:
        (1) whether the same or similar evidence reasonably would be expected to be offered at each of the hearings;
        (2) whether the proposed consolidation would conserve the time and resources of the Parties; and
        (3) whether any unfair prejudice would be suffered by one or more Parties as a result of the consolidation.
        If the Chief Hearing Officer proposes to consolidate two or more disciplinary proceedings, the Chief Hearing Officer shall serve upon the Parties notice of the proposed consolidation of disciplinary proceedings, together with a copy of each relevant complaint and any answer that has been filed thereto, pursuant to Rule 9132. The Parties shall have 14 days after service to file a response, stating any arguments in favor of or opposition to consolidation.
        (b) Consolidation Initiated by a Party
        A Party may file a motion to consolidate two or more disciplinary proceedings if such consolidation would further the efficiency of the disciplinary process, if the subject complaints involve common questions of law or fact or one or more of the same Respondents, or if one or more of the factors favoring consolidation set forth in paragraph (a) appear to be present. If a Party moves to consolidate two or more disciplinary proceedings, the Party shall file such motion, together with a copy of each relevant complaint and any answer thereto that has been filed, with the Office of Hearing Officers, and, pursuant to Rule 9133, shall serve the same upon the Parties in each of the cases proposed to be consolidated. The Parties shall have 14 days after service to file a response, stating any arguments in favor of or opposition to consolidation, and shall serve the response upon the Parties in each of the cases proposed to be consolidated. The Chief Hearing Officer shall issue an order approving or denying the request for consolidation.
        (c) Impact on Hearing Panel or Extended Hearing Panel
        If the Chief Hearing Officer issues an order to consolidate two or more disciplinary proceedings for which Hearing Panels or, if applicable, Extended Hearing Panels, have been appointed, the Chief Hearing Officer's order shall specify which Hearing Panel or, if applicable, Extended Hearing Panel, shall preside over the consolidated disciplinary proceeding, or shall appoint a new Hearing Panel or, if applicable, Extended Hearing Panel, to preside, based on the criteria set forth in Rules 9231 and 9232.
        (d) Severance Initiated by Chief Hearing Officer
        The Chief Hearing Officer may order the severance of a disciplinary proceeding into two or more disciplinary proceedings, upon his or her own motion. In determining whether to order the severance of such disciplinary proceedings, the Chief Hearing Officer shall consider:
        (1) whether the same or similar evidence reasonably would be expected to be offered at each of the possible hearings;
        (2) whether the severance would conserve the time and resources of the Parties; and
        (3) whether any unfair prejudice would be suffered by one or more Parties if the severance is (not) ordered.
        If the Chief Hearing Officer proposes to sever a disciplinary proceeding, the Chief Hearing Officer shall serve upon the Parties notice of the proposed severance of disciplinary proceedings pursuant to Rule 9132. The Parties shall have 14 days after service to file a response, stating any arguments in favor of or opposition to severance.
        (e) Severance Initiated by a Party
        A Party may file a motion to sever a disciplinary proceeding if one or more of the factors favoring severance set forth in paragraph (d) appear to be present. If a Party moves to sever a disciplinary proceeding, the Party shall file such motion with the Office of Hearing Officers, and, pursuant to Rule 9133, shall serve the same upon each of the parties to the action proposed to be severed. The Parties shall have 14 days after service to file a response, stating any arguments in favor of or opposition to severance, and shall serve the response upon the Parties in the case proposed to be severed. The Chief Hearing Officer shall issue an order approving or denying the request for severance.
        (f) Impact on Hearing Panel or Extended Hearing Panel of Severance
        If the Chief Hearing Officer issues an order to sever a disciplinary proceeding for which a Hearing Panel or, if applicable, Extended Hearing Panel, has been appointed, the Chief Hearing Officer's order shall specify whether the same Hearing Panel or, if applicable, Extended Hearing Panel, shall preside over the severed disciplinary proceedings, or shall appoint a new Hearing Panel(s) or, if applicable, Extended Hearing Panel(s), to preside over any or all of the severed proceedings, based on the criteria set forth in Rules 9231 and 9232.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-99-76 eff. Sept. 11, 2000.
        Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
        Amended by SR-NASD-97-28 eff. Aug. 7, 1997.

        Selected Notices: 00-56, 08-57.

      • 9215. Answer to Complaint

        (a) Form, Service, Notice
        Pursuant to Rule 9133, each Respondent named in a complaint shall serve an answer to the complaint on all other Parties within 25 days after service of the complaint on such Respondent, and at the time of service shall file such answer with the Office of Hearing Officers pursuant to Rules 9135, 9136 and 9137. The Hearing Officer assigned to a disciplinary proceeding pursuant to Rule 9213 may extend such period for good cause. Upon the receipt of a Respondent's answer, the Office of Hearing Officers shall promptly send written notice of the receipt of such answer to all Parties.
        (b) Content, Affirmative Defenses
        Unless otherwise ordered by the Hearing Officer, an answer shall specifically admit, deny, or state that the Respondent does not have and is unable to obtain sufficient information to admit or deny, each allegation in the complaint. When a Respondent intends to deny only part of an allegation, the Respondent shall specify so much of it as is admitted and deny only the remainder. A statement of lack of information shall be deemed a denial. Any allegation not denied in whole or in part shall be deemed admitted. Any affirmative defense shall be asserted in the answer.
        (c) Motion for More Definite Statement
        A Respondent may file with an answer a motion for a more definite statement of specified matters of fact or law to be considered or determined. Such motion shall state why each such matter of fact or law should be required to be made more definite. If the motion is granted, the order granting such motion shall set the periods for filing such a statement and any answer thereto.
        (d) Amendments to Answer
        Upon motion by a Respondent, the Hearing Officer may, after considering good cause shown by the Respondent and any unfair prejudice which may result to any other Party, permit an answer to be amended.
        (e) Extension of Time to Answer Amended Complaint
        If a complaint is amended pursuant to Rule 9212(b), the time for filing an answer or amended answer shall be the greater of the original time period within which the Respondent is required to respond, or 14 days after service of the amended complaint. If any Respondent has already filed an answer, such Respondent shall have 14 days after service of the amended complaint, unless otherwise ordered by the Hearing Officer, within which to file an amended answer.
        (f) Failure to Answer, Default
        If a Respondent does not file an answer or make any other filing or request related to the complaint with the Office of Hearing Officers within the time required, the Department of Enforcement shall send a second notice to such Respondent requiring an answer within 14 days after service of the second notice. The second notice shall state that failure of the Respondent to reply within the period specified shall allow the Hearing Officer, in the exercise of his or her discretion, pursuant to Rule 9269 to: (1) treat as admitted by the Respondent the allegations in the complaint; and (2) issue a default decision against the Respondent. If the Respondent fails to file an answer with the Office of Hearing Officers within the time required, the Hearing Officer may issue a default decision against the Respondent pursuant to Rule 9269.
        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.
        Amended by SR-NASD-98-57 eff. March 26, 1999.
        Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
        Amended by SR-NASD-97-28 eff. Aug. 7, 1997.

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

      • 9216. Acceptance, Waiver, and Consent; Plan Pursuant to SEA Rule 19d-1(c)(2)

        (a) Acceptance, Waiver, and Consent Procedures
        (1) Notwithstanding Rule 9211, if the Department of Enforcement has reason to believe a violation has occurred and the member or associated person does not dispute the violation, the Department of Enforcement may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a Hearing Panel or, if applicable, an Extended Hearing Panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed. Unless the letter states otherwise, the effective date of any sanction(s) imposed will be a date to be determined by FINRA staff.
        (2)(A) If a member or person associated with a member submits an executed letter of acceptance, waiver, and consent, by the submission such member or person associated with a member also waives:
        (i) any right of such member or person associated with a member to claim bias or prejudgment of the General Counsel, the National Adjudicatory Council, or any member of the National Adjudicatory Council, in connection with such person's or body's participation in discussions regarding the terms and conditions of the letter of acceptance, waiver, and consent, or other consideration of the letter of acceptance, waiver, and consent, including acceptance or rejection of such letter of acceptance, waiver, and consent; and
        (ii) any right of such member or person associated with a member to claim that a person violated the ex parte prohibitions of Rule 9143 or the separation of functions prohibitions of Rule 9144, in connection with such person's or body's participation in discussions regarding the terms and conditions of the letter of acceptance, waiver, and consent, or other consideration of the letter of acceptance, waiver, and consent, including acceptance or rejection of such letter of acceptance, waiver, and consent.
        (B) If a letter of acceptance, waiver, and consent is rejected, the member or associated person shall be bound by the waivers made under paragraphs (a)(1) and (a)(2)(A) for conduct by persons or bodies occurring during the period beginning on the date the letter of acceptance, waiver, and consent was executed and submitted and ending upon the rejection of the letter of acceptance, waiver, and consent.
        (3) If the member or associated person executes the letter of acceptance, waiver, and consent, it shall be submitted to the National Adjudicatory Council. The Review Subcommittee or the Office of Disciplinary Affairs may accept such letter or refer it to the National Adjudicatory Council for acceptance or rejection by the National Adjudicatory Council. The Review Subcommittee may reject such letter or refer it to the National Adjudicatory Council for acceptance or rejection by the National Adjudicatory Council.
        (4) If the letter is accepted by the National Adjudicatory Council, the Review Subcommittee, or the Office of Disciplinary Affairs, it shall be deemed final and shall constitute the complaint, answer, and decision in the matter. If the letter is rejected by the Review Subcommittee or the National Adjudicatory Council, FINRA may take any other appropriate disciplinary action with respect to the alleged violation or violations. If the letter is rejected, the member or associated person shall not be prejudiced by the execution of the letter of acceptance, waiver, and consent under paragraph (a)(1) and the letter may not be introduced into evidence in connection with the determination of the issues set forth in any complaint or in any other proceeding.
        (b) Procedure for Violation Under Plan Pursuant to SEA Rule 19d-1(c)(2)
        (1) Notwithstanding Rule 9211, FINRA or the National Adjudicatory Council may, subject to the requirements set forth in paragraphs (b)(2) through (b)(4) and in SEA Rule 19d-1(c)(2), impose a fine (not to exceed $2,500) and/or a censure on any member or associated person with respect to any rule listed in Rule 9217. If the Department of Enforcement has reason to believe a violation has occurred and if the member or associated person does not dispute the violation, the Department of Enforcement may prepare and request that the member or associated person execute a minor rule violation plan letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a Hearing Panel or, if applicable, an Extended Hearing Panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed. Unless the letter states otherwise, the effective date of any sanction(s) imposed will be a date to be determined by FINRA staff.
        (2)(A) If a member or person associated with a member submits an executed minor rule violation plan letter, by the submission such member or person associated with a member also waives:
        (i) any right of such member or person associated with a member to claim bias or prejudgment of the General Counsel, the National Adjudicatory Council, or any member of the National Adjudicatory Council, in connection with such person's or body's participation in discussions regarding the terms and conditions of the minor rule violation plan letter or other consideration of the minor rule violation plan letter, including acceptance or rejection of such minor rule violation plan letter; and
        (ii) any right of such member or person associated with a member to claim that a person violated the ex parte prohibitions of Rule 9143 or the separation of functions prohibitions of Rule 9144, in connection with such person's or body's participation in discussions regarding the terms and conditions of the minor rule violation plan letter or other consideration of the minor rule violation plan letter, including acceptance or rejection of such minor rule violation plan letter.
        (B) If a minor rule violation plan letter is rejected, the member or person associated with a member shall be bound by the waivers made under paragraphs (b)(1) and (b)(2)(A) for conduct by persons or bodies occurring during the period beginning on the date the minor rule violation plan letter was executed and submitted and ending upon the rejection of the minor rule violation plan letter.
        (3) If the member or associated person executes the minor rule violation plan letter, it shall be submitted to the National Adjudicatory Council. The Review Subcommittee or the Office of Disciplinary Affairs may accept such letter or refer it to the National Adjudicatory Council for acceptance or rejection by the National Adjudicatory Council. The Review Subcommittee may reject such letter or refer it to the National Adjudicatory Council for acceptance or rejection by the National Adjudicatory Council.
        (4) If the letter is accepted by the National Adjudicatory Council, the Review Subcommittee, or the Office of Disciplinary Affairs, it shall be deemed final and FINRA shall report the violation to the SEC as required by the SEC pursuant to a plan approved under SEA Rule 19d-1(c)(2). If the letter is rejected by the Review Subcommittee or the National Adjudicatory Council, FINRA may take any other appropriate disciplinary action with respect to the alleged violation or violations. If the letter is rejected, the member or associated person shall not be prejudiced by the execution of the minor rule violation plan letter under paragraph (b)(1) and the letter may not be introduced into evidence in connection with the determination of the issues set forth in any complaint or in any other proceeding.
        Amended by SR-FINRA-2018-027 eff. Aug. 3, 2018.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-2001-58 eff. Sep. 24, 2001.
        Amended by SR-NASD-99-76 eff. Sep. 11, 2000.
        Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
        Amended by SR-NASD-97-28 eff. Aug. 7, 1997.
        Amended by SR-NASD-93-76 eff. Mar. 29, 1994.
        Amended by SR-NASD-93-06 eff. Oct. 1, 1993.
        Amended eff. Oct. 18, 1990.

        Selected Notices: 00-56, 08-57.

      • 9217. Violations Appropriate for Disposition Under Plan Pursuant to SEA Rule 19d-1(c)(2)

        Any member of FINRA that is also a member of the New York Stock Exchange LLC ("NYSE") ("Dual Member") (including any persons affiliated with such member) may be subject to a fine under Rule 9216(b) with respect to any rule or By-Law provision listed in this Rule that applies to such member or person. However, any Dual Member that was not also a member of NASD as of July 30, 2007 and that does not engage in any activities that otherwise would require it to be a FINRA member (and its affiliated persons that are not otherwise subject to NASD rules) shall only be subject to a fine under Rule 9216(b) with respect to the following rules or By-Law provisions listed in this Rule: any FINRA By-Law or Schedule to the By-Laws, FINRA rule, SEA rule, or NYSE rule.
        Any member of FINRA that is not also a member of the NYSE (and its associated persons that are not otherwise subject to NYSE rules) may be subject to a fine under Rule 9216(b) with respect to any rule or By-Laws provision listed in this Rule, with the exception of the NYSE rules.
        •  Article IV of the FINRA By-Laws — Failure to timely submit amendments to Form BD.
        •  Article V of the FINRA By-Laws — Failure to timely submit amendments to Form U4.
        •  Article V of the FINRA By-Laws — Failure to timely submit amendments to Form U5.
        •  Schedule A. Sec. 1(b) of the FINRA By-Laws — Failure to make accurate payment of Trading Activity Fee.
        •  Rule 1210.04 - Failure to timely register.
        •  Rule 1240 — Failure to comply with the continuing education requirements.
        •  Rules 2210, 2211, 2212, 2213, 2215, and 2216 — Communications with the public.
        •  Rule 2220 — Options Communications.
        •  Rule 2251(a) — Failure to timely forward proxy and other issuer-related materials.
        •  Rule 2266 — Failure to provide written notification of availability of SIPC information at account opening or annually thereafter.
        •  Rule 2360(b)(3) and (b)(4) — Failure to comply with options position and exercise limits.
        •  Rule 2360(b)(5) — Failure to report options positions.
        •  Rule 2360(b)(23) — Failure to comply with contrary exercise advice procedures.
        •  Rule 3110 — Failure to maintain adequate written supervisory procedures where the underlying conduct is subject to Rule 9217.
        •  Rule 3160(a)(1), (3), (4) and (5) — Standards of conduct for conducting broker-dealer services on or off the premises of a financial institution pursuant to a networking arrangement, but excluding the networking agreement requirements.
        •  Rule 3170 — Failure to timely file reports pursuant to the Taping Rule.
        •  Rule 3210 — Failure to obtain consent of employer member, or give notification to executing member.
        •  Rule 4311(b) — Failure to obtain approval of carrying agreement.
        •  Rule 4360(b) — Failure to maintain adequate fidelity bond coverage.
        •  Rule 4370(a), (b), (c), (e) and (f) — Requirements to create, maintain and update a written business continuity plan and disclosure of such to customers.
        •  Rule 4510 Series — Failure to keep and preserve books, accounts, records, memoranda, and correspondence in conformance with all applicable laws, rules, regulations and statements of policy promulgated thereunder, and with FINRA rules.
        •   Rule 4517 — Failure to report, review or update executive representative designation and contact information.
        •  Rule 4521(d) — Failure to submit reports of cash and margin account balances.
        •  Rule 4524 — Failure to timely file or filing of incomplete reports or information.
        •  Rule 4530 — Failure to timely file reports.
        •  Rule 4560 — Failure to timely file reports of short positions on Form NS-1.
        •  Rule 4590 — Failure to synchronize business clocks used for recording date and time as required by applicable FINRA By-laws and rules.
        •  Rule 5110(b) — Failure to timely file or filing of incomplete documents or information.
        •  Rule 5121(a) — Failure to prominently disclose conflict of interest.
        •  Rule 5121(b)(2) — Failure to give timely notification of termination or settlement of public offering, or failure to file net capital computation.
        •  Rule 5122(b)(2) — Failure to timely file private placement documents.
        •  Rule 5190 — Failure to give timely notification of participation in offerings.
        •  Rules 6282, 6380A, 6380B, 6550, 6622, 6730, 7130, 7160, 7230A, 7230B, 7260A, 7260B, 7330, and 7360 — Transaction reporting in equity and debt securities.
        •  Rules 6181 and 6623 — Failure to timely report transactions in NMS, OTC and restricted equity securities.
        •  Rules 6182 and 6624 — Failure to accurately mark short sale transactions in NMS and OTC equity securities.
        •  Rule 6250 — Failure to comply with quote and order access requirements for FINRA's Alternative Display Facility.
        •  Rule 6760 — Failure to give timely or complete notification concerning offerings of TRACE-Eligible Securities.
        •  Rules 7440 and 7450 — Failure to submit data in accordance with the Order Audit Trail System ("OATS").
        •  Rules 8211 and 8213 — Failure to submit trading data as requested.
        •  Rule 11870 — Failure to abide by Customer Account Transfer Contracts.
        •  Failure to provide or update contact information as required by FINRA rules.
        •  Rule 311T(b)(5) — Failure of a member organization to have individuals responsible and qualified for the positions of Financial Principal, Operations Principal, Compliance Official, Branch Office Manager and Supervisory Analyst.
        •  Rules 312T(a), (b) and (c), 313T — Reporting rule violations.
        •  Rule 312T(i) — Failure to obtain approval rule violations.
        •  Rule 408T(a) — Requirement that written authorization be obtained for discretionary power in a customer's account.
        •  Rule 416AT — Failure to promptly provide or promptly update required membership profile information through the Electronic Filing Platform ("EFP"), or failure to electronically certify that required membership profile information is complete and accurate.
        •  SEA Rules 17a-3(a) and 17a-4 — Record retention rule violations.
        •  SEA Rule 10b-10 — Confirmation of Transactions.
        •  SEA Rule 17a-5 — Failure to timely file FOCUS reports and annual audit reports.
        •  SEA Rule 17a-10 — Failure to timely file Schedule I.
        •  Rule 200(g) of SEC Regulation SHO — Failure to accurately mark sell orders of equity securities.
        •  Rule 602(b)(5) of SEC Regulation NMS — Failure to properly update published quotations in certain Electronic Communication Networks ("ECNs").
        •  Rule 604 of SEC Regulation NMS — Failure to properly display limit orders.
        •  Rule 605(a)(1) and (3) of SEC Regulation NMS — Failure to timely report or provide complete order execution information.
        •  Rule 606 of SEC Regulation NMS — Failure to timely disclose or provide complete order routing information.
        •  MSRB Rule A-12(c) and (f) — Failure to timely pay annual fee and failure to designate and update electronic mail contact information for communications with MSRB.
        •  MSRB Rules G-2 and G-3 (b)(ii)(D) and (c)(ii)(D) — Failure to timely register.
        •  MSRB Rule G-3(i) — Failure to comply with the continuing education requirements.
        •  MSRB Rule G-6 — Failure to maintain adequate fidelity bond coverage.
        •  MSRB Rules G-8 and G-9 — Record retention rule violations.
        •  MSRB Rule G-10(a) — Failure to deliver investor brochure to customers promptly.
        •  MSRB Rule G-12 — Failure to abide by uniform practice rules.
        •  MSRB Rule G-14 — Failure to submit reports.
        •  MSRB Rule G-21 — Advertising.
        •  MSRB Rule G-27(c) — Failure to maintain adequate written supervisory procedures where the underlying conduct is subject to Rule 9217.
        •  MSRB Rule G-32 — Failure to timely submit reports.
        •  MSRB Rule G-37 — Failure to timely submit reports for political contributions.
        Amended by SR-FINRA-2019-009 eff. May 8, 2019.
        Amended by SR-FINRA-2017-036 eff. Jan. 22, 2018.
        Amended by SR-FINRA-2017-004 eff. April 3, 2017.
        Amended by SR-FINRA-2016-036 eff. Sep. 30, 2016.
        Amended by SR-FINRA-2015-050 eff. Dec. 24, 2015.
        Amended by SR-FINRA-2015-027 eff. Aug. 24, 2015.
        Amended by SR-FINRA-2015-004 eff. Feb. 12, 2015.
        Amended by SR-FINRA-2014-045 eff. Dec. 1, 2014.
        Amended by SR-FINRA-2013-033 eff. Sept. 26, 2013.
        Amended by SR-FINRA-2013-001 eff. Feb. 4, 2013.
        Amended by SR-FINRA-2011-065 eff. Dec. 5, 2011.
        Amended by SR-FINRA-2011-050 eff. Oct. 17, 2011.
        Amended by SR-FINRA-2011-030 eff. Aug. 1, 2011.
        Amended by SR-FINRA-2011-024 eff. July 1, 2011.
        Amended by SR-FINRA-2010-060 eff. Dec. 15, 2010.
        Amended by SR-FINRA-2010-023 eff. June 14, 2010.
        Amended by SR-FINRA-2010-002 eff. Feb. 8, 2010.
        Amended by SR-FINRA-2009-078 eff. Jan. 1, 2010.
        Amended by SR-FINRA-2009-078 eff. Dec. 14, 2009.
        Amended by SR-FINRA-2009-062 eff. Oct. 19, 2009.
        Amended by SR-FINRA-2009-005 eff. Feb. 17, 2009.
        Amended by SR-FINRA-2008-057 eff. Dec. 15, 2008.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-2007-055 eff. Sep. 24, 2007.
        Amended by SR-NASD-2006-091 eff. March 5, 2007.
        Amended by SR-NASD-2004-025 eff. Nov. 14, 2005.
        Amended by SR-NASD-2004-121 eff. Nov. 22, 2004.
        Amended by SR-NASD-2003-148 eff. Oct. 3, 2003.
        Amended by SR-NASD-2002-171 eff. Nov. 26, 2002.
        Amended by SR-NASD-2000-39 eff. Sep. 10, 2001.
        Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
        Amended by SR-NASD-97-28 eff. Aug. 7, 1997.

        Selected Notices: 01-54, 04-77, 05-71, 07-51, 08-33, 08-57, 13-32.

    • 9220. Request for Hearing; Extensions of Time, Postponements, Adjournments

      • 9221. Request for Hearing

        (a) Respondent Request for Hearing.
        With the filing of any Respondent's answer, such Respondent may:
        (1) request a hearing;
        (2) propose an appropriate location for the hearing; and
        (3) propose, if the complaint alleges at least one cause of action involving a violation of a statute or rule described in Rule 9120(u), that the Chief Hearing Officer select a Market Regulation Committee Panelist for a Hearing Panel or, if applicable, an Extended Hearing Panel as described in Rule 9231.
        If a Respondent requests a hearing, a hearing shall be granted. A Respondent who fails to request a hearing with the filing of his or her answer waives the right to a hearing unless a Hearing Officer, Hearing Panel, or, if applicable, an Extended Hearing Panel, grants, for good cause shown, a later filed motion by such Respondent requesting a hearing.
        (b) Hearing Officer Order Requiring Hearing
        In the absence of a request for a hearing from any Respondent, the Hearing Officer may order any complaint set down for hearing.
        (c) Authority of Hearing Panel, Extended Hearing Panel to Order Hearing
        If all Respondents waive a hearing, and the Hearing Officer does not order a hearing on his or her own motion, the Hearing Panel or, if applicable, the Extended Hearing Panel, may order a hearing or may consider the matter on the record, as defined in Rule 9267. If fewer than all Respondents waive a hearing, the Hearing Officer, the Hearing Panel, or, if applicable, the Extended Hearing Panel, may, in the exercise of its discretion, order that a hearing be held as to all Respondents. Alternatively, the Hearing Officer, the Hearing Panel, or, if applicable, the Extended Hearing Panel, may conduct a hearing as to only those Respondents who requested a hearing and consider the matter on the record as to those Respondents who waived a hearing.
        (d) Notice of Hearing
        The Hearing Officer shall issue a notice stating the date, time, and place of the hearing, and whether the hearing shall be held before a Hearing Panel or an Extended Hearing Panel, and shall serve such notice on the Parties at least 28 days before the hearing, unless:
        (1) in the discretion of the Hearing Officer, he or she determines that extraordinary circumstances require a shorter notice period; or
        (2) the Parties waive the notice period.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
        Amended by SR-NASD-97-28 eff. Aug. 7, 1997.
        Amended eff. Apr. 15, 1987.

        Selected Notice: 08-57.

      • 9222. Extensions of Time, Postponements, and Adjournments

        (a) Availability
        At any time prior to the issuance of the decision of the Hearing Panel or, if applicable, the Extended Hearing Panel, the Hearing Officer may, for good cause shown, extend or shorten any time limits prescribed by the Code for the filing of any papers and may, consistent with paragraph (b), postpone or adjourn any hearing.
        (b) Limitations on Postponements, Adjournments, and Extensions
        A hearing shall begin at the time and place ordered, unless the Hearing Officer, for good cause shown, changes the place of the hearing, postpones the commencement of the hearing, or adjourns a convened hearing for a reasonable period of time, subject to the limitations in paragraph (b)(2).
        (1) Additional Considerations
        In considering a motion for the postponement of the start of a hearing or, adjournment once a hearing has begun, the Hearing Officer shall consider:
        (A) the length of the proceeding to date;
        (B) the number of postponements, adjournments, or extensions already granted;
        (C) the stage of the proceedings at the time of the request;
        (D) potential harm to the investing public if an extension of time, adjournment, or postponement is granted; and
        (E) such other matters as justice may require.
        (2) Time Limit
        Postponements, adjournments, or extensions of time for filing papers shall not exceed 28 days unless the Hearing Officer states on the record or provides by written order the reasons a longer period is necessary.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-97-28 eff. Aug. 7, 1997.
        Amended eff. Oct. 18, 1990.

        Selected Notice: 08-57.

    • 9230. Appointment of Hearing Panel, Extended Hearing Panel

      • 9231. Appointment by the Chief Hearing Officer of Hearing Panel or Extended Hearing Panel or Replacement Hearing Officer

        (a) Appointment
        The Chief Hearing Officer shall appoint a Hearing Panel or an Extended Hearing Panel to conduct the disciplinary proceeding and issue a decision.
        (b) Hearing Panel
        The Hearing Panel shall be composed of a Hearing Officer and two Panelists, except as provided in paragraph (e) and in Rule 9234 (a), (c), (d), or (e). The Hearing Officer shall serve as the chair of the Hearing Panel. Each Panelist shall be associated with a member of FINRA or retired therefrom.
        (1) Except as provided in subparagraph (2) below, the Chief Hearing Officer shall select as a Panelist a person who:
        (A) previously served on a District Committee;
        (B) currently serves or previously served on a Regional Committee;
        (C) previously served on the National Adjudicatory Council;
        (D) previously served on a disciplinary subcommittee of the National Adjudicatory Council or the National Business Conduct Committee, including a Subcommittee, an Extended Proceeding Committee, or their predecessor subcommittees;
        (E) previously served as a Director or a Governor, but does not serve currently in any of these positions; or
        (F) currently serves or previously served on a committee appointed or approved by the FINRA Board, but does not serve currently on the National Adjudicatory Council or as a Director or a Governor.
        (2) If the complaint alleges at least one cause of action involving a violation of a statute or a rule described in Rule 9120(u), the Chief Hearing Officer may select as a Panelist a person who currently serves on the Market Regulation Committee or who previously served on the Market Regulation Committee not earlier than four years before the date the complaint was served upon the Respondent who was the first served Respondent in the disciplinary proceeding for which the Hearing Panel or the Extended Hearing Panel is being appointed.
        (c) Extended Hearing Panel
        Upon consideration of the complexity of the issues involved, the probable length of the hearing, or other factors that the Chief Hearing Officer deems material, the Chief Hearing Officer may determine that a matter shall be designated an Extended Hearing, and that such matter shall be considered by an Extended Hearing Panel. The Extended Hearing Panel shall be composed of a Hearing Officer and two Panelists, except as provided in Rule 9234(a), (c), (d), or (e). The Hearing Officer will serve as the chair of the Extended Hearing Panel. The Panelists shall be associated with a FINRA member, or retired therefrom. The Chief Hearing Officer shall have discretion to compensate any or all Panelists of an Extended Hearing Panel at the rate then in effect for arbitrators appointed under the Rule 12000 Series.
        (1) Except as provided in (2), the Chief Hearing Officer shall select as a Panelist a person who meets the criteria set forth in paragraph (b)(1).
        (2) If the complaint alleges at least one cause of action involving a violation of a statute or a rule described in Rule 9120(u), the Chief Hearing Officer may select as a Panelist a person who currently serves on the Market Regulation Committee or who previously served on the Market Regulation Committee not earlier than four years before the date the complaint was served upon the Respondent who was the first served Respondent in the disciplinary proceeding for which the Hearing Panel or the Extended Hearing Panel is being appointed.
        (d) Observer
        A person who is qualified to serve as a Panelist may be designated by the Chief Hearing Officer to serve as an observer to a Hearing Panel or an Extended Hearing Panel. If the Chief Hearing Officer designates more than two people to serve as observers to a Hearing Panel or an Extended Hearing Panel, the Chief Hearing Officer shall obtain the consent of the Parties. An observer may attend any hearing of a disciplinary proceeding and observe the proceeding, but may not vote or participate in any other manner in the hearing or the deliberations of the Hearing Panel or the Extended Hearing Panel, or participate in the administration of the disciplinary proceeding.
        (e) Appointment of Replacement Hearing Officer
        In the event that a Hearing Officer withdraws, is incapacitated, or otherwise is unable to continue service after being appointed, the Chief Hearing Officer shall appoint a replacement Hearing Officer. To ensure fairness to the parties and expedite completion of the proceeding when a replacement Hearing Officer is appointed after the hearing has commenced, the replacement Hearing Officer has discretion to exercise the following powers:
        (1) Allow the Hearing Panelists to resolve the issues in the proceeding and issue a decision without the participation of the replacement Hearing Officer in the decision. The replacement Hearing Officer may advise the Hearing Panelists regarding legal issues, and shall exercise the powers of the Hearing Officer under Rule 9235(a), including preparing and signing the decision on behalf of the Hearing Panel, in accordance with Rule 9268; or
        (2) Certify familiarity with the record and participate in the resolution of the issues in the case and in the issuance of the decision. In exercising this power, the replacement Hearing Officer may recall any witness before the Hearing Panel.
        Amended by SR-FINRA-2018-021 eff. May 18, 2018.
        Amended by SR-FINRA-2014-036 eff. Sept. 26, 2014.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-2005-087 eff. Aug. 1, 2006
        Amended by SR-NASD-2002-70 eff. May 30, 2002.
        Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
        Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

        Selected Notices: 08-57, 14-45.

      • 9232. Criteria for Selection of Panelists and Replacement Panelists

        (a) Chief Hearing Officer Selection Alternatives
        Following a determination of whether a Hearing Panel or an Extended Hearing Panel should be appointed, the Chief Hearing Officer shall determine:
        (1) which Regional Committee shall be the Primary Regional Committee from which Panelists may be selected; and
        (2) whether one of the Panelists may be selected from the Market Regulation Committee.
        (b) Criteria for Selection of Panelist from Market Regulation Committee
        The Chief Hearing Officer may select one but not more than one Panelist from the Market Regulation Committee, as provided in Rule 9231, to serve in a disciplinary proceeding if the complaint alleges at least one cause of action involving a violation of a statute or a rule described in Rule 9120(u).
        (c) Criteria for Designation of Primary Regional Committee
        The Chief Hearing Officer shall designate a Regional Committee as the Primary Regional Committee based upon relevant facts and circumstances of the case, including but not limited to:
        (1) the location of a Respondent's principal office if the Respondent is or was a member firm;
        (2) the location of a Respondent's office at the time of the alleged misconduct if the Respondent is or was an associated person;
        (3) the location of the office of a member or an associated person, or a former member or associated person, where the alleged misconduct occurred;
        (4) the location of witnesses at the time of the filing of the complaint, especially the location of witnesses who are or were customers of a Respondent;
        (5) the location, at the time of the alleged misconduct, of the main, branch, or other office in which supervisory personnel, who are or were responsible for the supervision of a Respondent, were employed; and
        (6) the location, at the time of the alleged misconduct, of the main, branch, or other office in which supervisory personnel, who are or were responsible for the supervision of the office, division, function, or segment of the member where the alleged misconduct occurred, were employed.
        (d) Criteria for Appointment of a Panelist
        After the Chief Hearing Officer designates the Primary Regional Committee, the Chief Hearing Officer shall select Panelists from the current members of the Primary Regional Committee, the other categories of persons eligible to serve as Panelists as set forth in Rule 9231(b)(1)(A) through (F) or, if applicable, in Rule 9231(c), who are located in the same geographic area as the Primary Regional Committee, and, if applicable, from the current or former members of the Market Regulation Committee, based upon the following criteria:
        (1) expertise;
        (2) the absence of any conflict of interest or bias, and any appearance thereof;
        (3) availability; and,
        (4) the frequency with which a person has served as a Panelist on a Hearing Panel or an Extended Hearing Panel during the past two years, favoring the selection of a person as a Panelist who has never served or served infrequently as a Panelist during the period.
        (e) Appointment of Panelists from Other than Primary Regional Committee
        Designation of the Primary Regional Committee does not preclude the Chief Hearing Officer from selecting one or more Panelists from other categories of eligible Panelists if the Chief Hearing Officer determines that one or more persons from other categories of eligible Panelists more clearly meet the criteria of paragraph (d)(1) through (4) and the public interest or the administration of FINRA's regulatory and enforcement program would be enhanced by the selection of such Panelists.
        Amended by SR-FINRA-2018-021 eff. May 18, 2018.
        Amended by SR-FINRA-2014-036. eff. Sept. 26, 2014.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
        Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

        Selected Notices: 08-57, 14-45.

      • 9233. Hearing Panel or Extended Hearing Panel: Recusal and Disqualification of Hearing Officers

        (a) Recusal, Withdrawal of Hearing Officer
        If at any time a Hearing Officer determines that he or she has a conflict of interest or bias or circumstances otherwise exist where his or her fairness might reasonably be questioned, the Hearing Officer shall notify the Chief Hearing Officer and the Chief Hearing Officer shall issue and serve on the Parties a notice stating that the Hearing Officer has withdrawn from the matter. In the event that a Hearing Officer withdraws, is incapacitated, or otherwise is unable to continue service after being appointed, the Chief Hearing Officer shall appoint a replacement Hearing Officer. In such a case, the replacement Hearing Officer shall proceed according to Rule 9231(e).
        (b) Motion for Disqualification
        A Party may move for the disqualification of a Hearing Officer. A motion shall be based upon a reasonable, good faith belief that a conflict of interest or bias exists or circumstances otherwise exist where the Hearing Officer's fairness might reasonably be questioned, and shall be accompanied by an affidavit setting forth in detail the facts alleged to constitute grounds for disqualification, and the dates on which the Party learned of those facts. Such motions shall be filed not later than 15 days after the later of:
        (1) when the Party learned of the facts believed to constitute the disqualification; or
        (2) when the Party was notified of the assignment of the Hearing Officer.
        (c) Disposition of Disqualification Motion
        A motion for disqualification of a Hearing Officer shall be decided by the Chief Hearing Officer who shall promptly investigate whether disqualification is required and issue a written ruling on the motion. In the event of a disqualification of the Hearing Officer, the Chief Hearing Officer shall appoint a replacement Hearing Officer.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-2002-70 eff. May 30, 2002.
        Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

        Selected Notice: 08-57.

      • 9234. Hearing Panel or Extended Hearing Panel: Recusal and Disqualification of Panelists

        (a) Recusal, Withdrawal of Panelist
        If at any time a Panelist of a Hearing Panel or an Extended Hearing Panel determines that he or she has a conflict of interest or bias or circumstances otherwise exist where his or her fairness might reasonably be questioned, the Panelist shall notify the Hearing Officer and the Hearing Officer shall issue and serve on the Parties a notice stating that the Panelist has withdrawn from the matter. In the event that a Panelist withdraws, is incapacitated, or otherwise is unable to continue service after being appointed, the Chief Hearing Officer may, in the exercise of discretion, determine whether to appoint a replacement Panelist. In the event that both Panelists withdraw, are incapacitated, or otherwise are unable to continue service after being appointed, the Chief Hearing Officer shall appoint two replacement Panelists.
        (b) Disqualification: Motion of Party; Order of Chief Hearing Officer
        (1) A Party may file a motion to disqualify a Panelist of a Hearing Panel or an Extended Hearing Panel. A motion shall be based upon a reasonable, good faith belief that a conflict of interest or bias exists or circumstances otherwise exist where the Panelist's fairness might reasonably be questioned, and shall be accompanied by an affidavit setting forth in detail the facts alleged to constitute grounds for disqualification, and the dates on which the Party learned of those facts.
        (2) Such motions shall be filed not later than 15 days after the later of:
        (A) when the Party learned of the facts believed to constitute the disqualification; or
        (B) when the Party was notified of the appointment of the Panelist.
        (3) The Chief Hearing Officer may order the disqualification of a Panelist of a Hearing Panel or an Extended Hearing Panel if the Chief Hearing Officer determines that a conflict of interest or bias exists or circumstances otherwise exist where the Panelist's fairness might reasonably be questioned, and shall state the facts constituting the grounds for disqualification.
        (c) Disposition of Disqualification Motion: Challenge to Single Member of Hearing Panel
        If a Party files a motion to disqualify a Panelist of a Hearing Panel or an Extended Hearing Panel, the Hearing Officer shall promptly investigate whether disqualification is required and shall issue a written ruling on the motion. In the event a Panelist is disqualified, the Chief Hearing Officer may, in the exercise of discretion, appoint a replacement Panelist.
        (d) Disposition of Disqualification Motion: Challenge to Both Panelists of Hearing Panel or Extended Hearing Panel
        If a Party files a motion to disqualify both Panelists of a Hearing Panel or an Extended Hearing Panel, the Hearing Officer shall promptly investigate whether disqualification is required and shall issue a written ruling on the motion. In the event one Panelist is disqualified, the Chief Hearing Officer may, in the exercise of discretion, appoint a replacement Panelist. In the event both Panelists are disqualified, the Chief Hearing Officer shall promptly appoint two persons as replacement Panelists.
        (e) Disposition of Disqualification Motion: Challenge to Both Panelists of Hearing Panel or Extended Hearing Panel and Hearing Officer
        If a Party files a motion to disqualify both Panelists of a Hearing Panel or an Extended Hearing Panel, and the Hearing Officer, the Chief Hearing Officer shall promptly investigate whether disqualification is required and shall issue a written ruling on the motion. In the event a Panelist is disqualified, the Chief Hearing Officer may, in the exercise of discretion, appoint a replacement Panelist. In the event both Panelists are disqualified, the Chief Hearing Officer shall promptly appoint two persons as replacement Panelists. In the event a Hearing Officer and a Panelist are disqualified, the Chief Hearing Officer shall promptly appoint a replacement Hearing Officer. In the event both Panelists and the Hearing Officer are disqualified, the Chief Hearing Officer shall promptly appoint a replacement Hearing Officer and two persons as replacement Panelists.
        (f) Criteria for Replacement Panelist
        If the Chief Hearing Officer appoints a replacement Panelist by operation of this Rule, the Chief Hearing Officer shall do so using the criteria set forth in Rule 9232.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
        Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

        Selected Notice: 08-57.

      • 9235. Hearing Officer Authority

        (a) Hearing Officer Authority
        The Hearing Officer shall be selected by the Chief Hearing Officer and shall have authority to do all things necessary and appropriate to discharge his or her duties. In addition to the powers exercised by all members of the Hearing Panel or, if applicable, the Extended Hearing Panel, the powers of the Hearing Officer include, but are not limited to:
        (1) holding pre-hearing and other conferences and requiring the attendance at any such conference of at least one representative of each Party who has authority to negotiate the resolution of issues in controversy;
        (2) regulating the course of the hearing;
        (3) ordering the Parties to present oral arguments at any stage of the disciplinary proceeding;
        (4) resolving any and all procedural and evidentiary matters, discovery requests, and other non-dispositive motions, subject to any limitations set forth elsewhere in the Code;
        (5) reopening any hearing, upon notice to all Parties, prior to the issuance of the decision of the Hearing Panel or, if applicable, the Extended Hearing Panel;
        (6) creating and maintaining the official record of the disciplinary proceeding; and
        (7) drafting a decision that represents the views of the majority of the Hearing Panel or, if applicable, the Extended Hearing Panel.
        (b) Authority in the Absence of Hearing Officer
        If the Hearing Officer appointed to a case is temporarily unavailable or unable for any reason to discharge his or her duties in a particular proceeding under conditions not requiring the appointment of a replacement Hearing Officer, the Chief Hearing Officer or the Deputy Chief Hearing Officer in his or her discretion may exercise the necessary authority in the same manner as if he or she had been appointed Hearing Officer in the particular proceeding.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
        Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

        Selected Notice: 08-57.

    • 9240. Pre-hearing Conference and Submission

      • 9241. Pre-hearing Conference

        (a) Purposes
        The purposes of a pre-hearing conference include, but are not limited to:
        (1) expediting the disposition of the proceeding;
        (2) establishing procedures to manage the proceeding efficiently; and
        (3) improving the quality of the hearing through more thorough preparation.
        (b) Procedure
        On his or her own motion or at the request of a Party, the Hearing Officer may, in his or her discretion, order counsel or any Party to meet for a pre-hearing conference. Such conferences also may be held with one or more persons participating by telephone or other remote means.
        (c) Subjects to be Discussed
        At a pre-hearing conference, the Hearing Officer shall schedule an expedited proceeding as required by Rule 9290, and may consider and take action with respect to any or all of the following:
        (1) simplification and clarification of the issues;
        (2) exchange of witness and exhibit lists and copies of exhibits;
        (3) stipulations, admissions of fact, and stipulations concerning the contents, authenticity, or admissibility into evidence of documents;
        (4) matters of which official notice may be taken;
        (5) the schedule for exchanging pre-hearing motions or briefs, if any;
        (6) the method of service and filing of papers by the Parties;
        (7) determination of hearing dates;
        (8) amendments to the complaint or answers thereto;
        (9) production of documents as set forth in Rule 9251;
        (10) designation of relevant portions of transcripts from investigative testimony or other proceedings and the inclusion of an index for such testimony; and
        (11) such other matters as may aid in the orderly and expeditious disposition of the proceeding.
        (d) Scheduling
        An initial pre-hearing conference, unless determined by the Hearing Officer to be unnecessary or premature, shall be held within 21 days after filing of an answer, or after the expiration of the second period provided for filing an answer as set forth in Rule 9215(f). When a complaint names multiple Respondents, the 21-day period shall commence from the later of (i) the date on which the last timely answer was filed, or (ii) if one or more Respondents have failed to answer, from the expiration of the second period provided for filing an answer under Rule 9215(f).
        (e) Pre-hearing Order
        At or following the conclusion of any conference held pursuant to this Rule, the Hearing Officer shall enter a written ruling or order that recites any agreements reached and any procedural determinations made by the Hearing Officer.
        (f) Failure to Appear: Default
        The Hearing Officer may issue a default decision, pursuant to Rule 9269, against a Party that fails to appear, in person or through counsel or a representative, at a pre-hearing conference of which the Party has due notice.
        Amended by SR-FINRA-2011-044 eff. Mar. 30, 2012.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-98-80 eff. June 23, 2003.
        Amended by SR-NASD-98-57 eff. March 26, 1999.
        Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
        Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

        Selected Notices: 99-16, 03-35, 08-57, 12-12.

      • 9242. Pre-hearing Submission

        (a) Requirement to Furnish Information
        Prior to a hearing before a Hearing Panel or, if applicable, an Extended Hearing Panel, the Hearing Officer, in the exercise of his or her discretion, may order a Party to furnish to all other Parties and the Hearing Panel or, if applicable, the Extended Hearing Panel, such information as deemed appropriate, including any or all of the following:
        (1) an outline or narrative summary of a Party's case or defense;
        (2) the legal theories upon which a Party shall rely;
        (3) a list and copies of documents that a Party intends to introduce at the hearing;
        (4) a list of witnesses who shall testify on a Party's behalf, including the witnesses' names, occupations, addresses, and a brief summary of their expected testimony; and,
        (5) if a witness shall be called to testify as an expert, a statement of the expert's qualifications, a listing of other proceedings in which the expert has given expert testimony, a list of the expert's publications, and copies of those publications that are not readily available to the other Parties and the Hearing Panel or, if applicable, the Extended Hearing Panel.
        (b) Prohibition on Serving as Expert Witness
        No former officer of FINRA shall, within a period of one year immediately after termination of employment with FINRA, provide expert testimony on behalf of any other person under the Rule 9000 Series. Nothing in this Rule shall prohibit a former officer of FINRA from testifying as a witness on behalf of FINRA.
        Amended by SR-FINRA-2011-032 eff. July 2, 2012.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

        Selected Notice: 08-57.

    • 9250. Discovery

      • 9251. Inspection and Copying of Documents in Possession of Staff

        (a) Documents to be Available for Inspection and Copying
        (1) Unless otherwise provided by this Rule, or by order of the Hearing Officer, the Department of Enforcement shall make available for inspection and copying by any Respondent, Documents prepared or obtained by Interested FINRA Staff in connection with the investigation that led to the institution of proceedings. Such Documents include but are not limited to:
        (A) requests for information issued pursuant to Rule 8210;
        (B) every other written request directed to persons not employed by FINRA to provide Documents or to be interviewed;
        (C) the Documents provided in response to any such requests described in (A) and (B) above;
        (D) all transcripts and transcript exhibits; and
        (E) all other Documents obtained from persons not employed by FINRA.
        (2) The Department of Enforcement shall promptly inform the Hearing Officer and each other Party if, after the issuance of a complaint, requests for information under Rule 8210 are issued under the same investigative file number under which the investigation leading to the institution of disciplinary proceedings was conducted. If Interested FINRA Staff receives Documents pursuant to a request for information under Rule 8210 after Documents have been made available to a Respondent for inspection and copying as set forth in paragraph (a), and if such Documents are material and relevant to the disciplinary proceeding in which such Respondent is a Party, the additional Documents shall be made available to the Respondent not later than 14 days after the Interested FINRA Staff receives such Documents. If a hearing on the merits is scheduled to begin, Interested FINRA Staff shall make the additional Documents available to the Respondent not less than ten days before the hearing. If Interested FINRA Staff receives such Documents ten or fewer days before a hearing on the merits is scheduled to begin or after such hearing begins, Interested FINRA Staff shall make the additional Documents available immediately to the Respondent.
        (3) Nothing in paragraph (a)(1) shall limit the discretion of the Department of Enforcement to make available any other Document or the authority of the Hearing Officer to order the production of any other Document.
        (b) Withheld Documents
        (1) The Department of Enforcement may withhold a Document if:
        (A) the Document is privileged or constitutes attorney work product;
        (B) the Document is an examination or inspection report, an internal memorandum, or other note or writing prepared by a FINRA employee that shall not be offered in evidence;
        (C) the Document would disclose (i) an examination, investigatory or enforcement technique or guideline of FINRA, a federal, state, or foreign regulatory authority, or a self-regulatory organization; (ii) the identity of a source, including a federal, state, or foreign regulatory authority or a self-regulatory organization that furnished information or was furnished information on a confidential basis regarding an investigation, an examination, an enforcement proceeding, or any other type of civil or criminal enforcement action; or (iii) an examination, an investigation, an enforcement proceeding, or any other type of civil or criminal enforcement action under consideration by, or initiated by, FINRA, a federal, state, or foreign regulatory authority, or a self-regulatory organization; or
        (D) the Hearing Officer grants leave to withhold a Document or category of Documents as not relevant to the subject matter of the proceeding, or for other good cause shown.
        (2) The Department of Enforcement shall withhold a Document if the Document is prohibited from disclosure by federal law.
        (3) Nothing in paragraph (b)(1) authorizes the Department of Enforcement to withhold a Document, or a part thereof, that contains material exculpatory evidence.
        (c) Withheld Document List
        The Hearing Officer may require the Department of Enforcement to submit to the Hearing Officer a list of Documents withheld pursuant to paragraph (b) or to submit to the Hearing Officer any Document withheld. Upon review, the Hearing Officer may order the Department of Enforcement to make the list or any Document withheld available to the other Parties for inspection and copying unless federal law prohibits disclosure of the Document or its existence. A motion to require the Department of Enforcement to produce a list of Documents withheld pursuant to paragraph (b) shall be based upon some reason to believe that a Document is being withheld in violation of the Code.
        (d) Timing of Inspection and Copying
        The Hearing Officer shall determine the schedule of production of documents pursuant to this Rule. Unless otherwise ordered by the Hearing Officer, the Department of Enforcement shall commence making Documents available to a Respondent for inspection and copying pursuant to this Rule not later than 21 days after service of the Respondent's answer or, if there are multiple Respondents, not later than 21 days after the last timely answer is filed. If a Respondent in a multi-Respondent case fails to answer, the Department of Enforcement shall make Documents available to all other Respondents not later than the later of:
        (1) 21 days after the filing date of the last timely answer, or
        (2) the expiration of the second period provided for filing an answer as set forth in Rule 9215(f).
        (e) Place and Time of Inspection and Copying
        Documents subject to inspection and copying pursuant to this Rule shall be made available to the Respondent for inspection and copying at FINRA office where they are ordinarily maintained, or at such other FINRA office as the Hearing Officer, in his or her discretion, shall designate, or as the Parties otherwise agree. A Respondent shall be given access to the Documents at FINRA's offices during normal business hours. A Respondent shall not be given custody of the Documents or be permitted to remove the Documents from FINRA's offices.
        (f) Copying Costs
        A Respondent may obtain a photocopy of all Documents made available for inspection. A Respondent shall be responsible for the cost of photocopying. Unless otherwise ordered, charges for copies made at the request of a Respondent shall be at a rate to be established by FINRA staff.
        (g) Failure to Make Documents Available — Harmless Error
        In the event that a Document required to be made available to a Respondent pursuant to this Rule is not made available by the Department of Enforcement, no rehearing or amended decision of a proceeding already heard or decided shall be required unless the Respondent establishes that the failure to make the Document available was not harmless error. The Hearing Officer, or, upon appeal or review, a Subcommittee, an Extended Proceeding Committee, or the National Adjudicatory Council, shall determine whether the failure to make the document available was not harmless error, applying applicable FINRA, SEC, and federal judicial precedent.
        Amended by SR-FINRA-2018-027 eff. Aug. 3, 2018.
        Amended by SR-FINRA-2011-044 eff. Mar. 30, 2012.
        Amended by SR-FINRA-2011-031 eff. Dec. 2, 2011.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-99-76 eff. Sept. 11, 2000.
        Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
        Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

        Selected Notices: 00-56, 08-57, 11-50, 12-12.

      • 9252. Requests for Information

        (a) Content and Timing of Requests
        A Respondent who requests that FINRA invoke Rule 8210 to compel the production of Documents or testimony at the hearing shall do so in writing and serve copies on all Parties. Such request shall: be submitted to the Hearing Officer no later than 21 days before the scheduled hearing date; describe with specificity the Documents, the category or type of Documents, or the testimony sought; state why the Documents, the category or type of Documents, or the testimony are material; describe the requesting Party's previous efforts to obtain the Documents, the category or type of Documents, or the testimony through other means; and state whether the custodian of each Document, or the custodian of the category or type of Documents, or each proposed witness is subject to FINRA's jurisdiction.
        (b) Standards for Issuance
        A request that FINRA compel the production of Documents or testimony shall be granted only upon a showing that: the information sought is relevant, material, and non-cumulative; the requesting Party has previously attempted in good faith to obtain the desired Documents and testimony through other means but has been unsuccessful in such efforts; and each of the persons from whom the Documents and testimony are sought is subject to FINRA's jurisdiction. In addition, the Hearing Officer shall consider whether the request is unreasonable, oppressive, excessive in scope, or unduly burdensome, and whether the request should be denied, limited, or modified.
        (c) Limitations on Requests
        If, after consideration of all the circumstances, the Hearing Officer determines that a request submitted pursuant to this Rule is unreasonable, oppressive, excessive in scope, or unduly burdensome, he or she shall deny the request, or grant it only upon such conditions as fairness requires. In making the foregoing determination, the Hearing Officer may inquire of the other Parties whether they shall stipulate to the facts sought to be proved by the Documents or testimony sought. If the Hearing Officer grants the request, the Hearing Officer shall order that requested Documents be produced to all Parties not less than ten days before the hearing, and order that witnesses whose testimony was requested appear and testify at the hearing. If the Hearing Officer grants the request ten or fewer days before a hearing on the merits is scheduled to begin or after such hearing begins, the Documents or testimony shall be produced immediately to all Parties.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

        Selected Notice: 08-57.

      • 9253. Production of Witness Statements

        (a) Availability
        Notwithstanding the provisions of Rule 9251(b),
        (1) A Respondent in a disciplinary proceeding may file a motion requesting that the Department of Enforcement produce for inspection and copying any statement of any person called or to be called as a witness by the Department of Enforcement that pertains, or is expected to pertain, to his or her direct testimony and which is "a stenographic, mechanical, electrical, or other recording, or a transcription thereof, which is a substantially verbatim recital of an oral statement made by said witness and recorded contemporaneously with the making of such oral statement," as that phrase is used in 18 U.S.C. § 3500(e)(2).
        (2) A Respondent in a disciplinary proceeding may also file a motion requesting that the Department of Enforcement produce for inspection and copying any contemporaneously written statement made by an Interested FINRA Staff member during a routine examination or inspection about the substance of oral statements made by a non-FINRA person when (a) either the Interested FINRA Staff member or non-FINRA person is called as a witness by the Department of Enforcement, and (b) that portion of the statement for which production is sought directly relates to the Interested FINRA Staff member's testimony or the testimony of the non-FINRA witness.
        (b) Failure to Produce — Harmless Error
        In the event that a statement required to be made available for inspection and copying by a Respondent is not provided by the Department of Enforcement, there shall be no rehearing of a proceeding already heard, or issuance of an amended decision in a proceeding already decided, unless the Respondent establishes that the failure to provide the statement was not harmless error. The Hearing Officer, or upon appeal or review, a Subcommittee, an Extended Proceeding Committee, or the National Adjudicatory Council, shall determine whether the failure to provide any statement was not harmless error, applying applicable FINRA, SEC, and federal judicial precedent.
        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.
        Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
        Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

        Selected Notices: 00-56, 08-57.

    • 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.

    • 9270. Settlement Procedure

      (a) When Offer Allowed; No Stay of Proceeding
      A Respondent who is notified that a proceeding has been instituted against him or her may propose in writing an offer of settlement at any time. If a Respondent proposes an offer of settlement before the hearing on the merits has begun, the making of an offer of settlement shall not stay the proceeding, unless otherwise decided by the Hearing Officer. If a Respondent proposes an offer of settlement after the hearing on the merits has begun, the making of an offer of settlement shall not stay the proceeding, unless otherwise decided by the Hearing Panel or, if applicable, the Extended Hearing Panel.
      (b) Settlement Offer Shall Conform to Rule
      A Respondent who makes an offer of settlement shall do so in conformity with the provisions of this Rule and shall not make such an offer of settlement frivolously or propose a sanction inconsistent with the seriousness of the violations to be found.
      (c) Content and Signature Requirements
      An offer of settlement shall be in writing and signed by the person making the offer, and, if the person is represented by counsel or a representative, signed also by the counsel or representative. The offer of settlement shall contain in reasonable detail:
      (1) a statement describing the investigative or other origin of the disciplinary action;
      (2) the specific statutory or rule provisions that the member or associated person is alleged to have violated;
      (3) a statement containing the acts or practices which the member or associated person is alleged to have engaged in or omitted;
      (4) a statement consenting to findings of fact and violations consistent with the statements contained in the offer of settlement required by paragraphs (c)(2) and (c)(3);
      (5) a proposed sanction to be imposed that is consistent with FINRA's then current sanction guidelines or, if inconsistent with the sanction guidelines, a detailed statement supporting the proposed sanction;
      (6) if applicable, a proposed permanent cease and desist order to be imposed that is consistent with the requirements of Rule 9291(a) concerning the content, scope, and form of a permanent cease and desist order; and
      (7) the effective date of any sanction(s) imposed, or a statement that the effective date of the sanction(s) will be a date to be determined by FINRA staff.
      (d) Waiver
      (1) If a Respondent submits an offer of settlement, by the submission such Respondent waives:
      (A) any right of such Respondent to a hearing before a Hearing Panel or, if applicable, an Extended Hearing Panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or any right otherwise to challenge or contest the validity of the order issued, if the offer of settlement and order of acceptance are accepted;
      (B) any right of such Respondent to claim bias or prejudgment of the Chief Hearing Officer, Hearing Officer, a Hearing Panel or, if applicable, an Extended Hearing Panel, a Panelist on a Hearing Panel, or, if applicable, an Extended Hearing Panel, the General Counsel, the National Adjudicatory Council, or any member of the National Adjudicatory Council, in connection with such person's or body's participation in discussions regarding the terms and conditions of the offer of settlement and the order of acceptance, or other consideration of the offer of settlement and order of acceptance, including acceptance, or rejection of such offer of settlement and order of acceptance; and
      (C) any right of such Respondent to claim that a person or body violated the ex parte prohibitions of Rule 9143 or the separation of functions prohibitions of Rule 9144, in connection with such person's or body's participation in discussions regarding the terms and conditions of the offer of settlement and the order of acceptance, or other consideration of the offer of settlement and order of settlement, including acceptance or rejection of such offer of settlement and order of acceptance.
      (2) If an offer of settlement and an order of acceptance are rejected, the Respondent shall be bound by the waivers made in this paragraph (d) for conduct by persons or bodies occurring during the period beginning from the date the offer of settlement was submitted and ending upon the rejection of the offer of settlement and order of acceptance.
      (e) Uncontested Offers of Settlement
      If a Respondent makes an offer of settlement and the Department of Enforcement does not oppose it, the offer of settlement is uncontested. If an offer of settlement is determined to be uncontested by the Department of Enforcement before a hearing on the merits has begun, the Department of Enforcement shall transmit the uncontested offer of settlement and a proposed order of acceptance to the National Adjudicatory Council with its recommendation. If an offer of settlement is determined to be uncontested by the Department of Enforcement after a hearing on the merits has begun, the Department of Enforcement shall transmit the offer of settlement and a proposed order of acceptance to the Hearing Panel or, if applicable, the Extended Hearing Panel for acceptance or rejection. If accepted by the Hearing Panel or, if applicable, Extended Hearing Panel, the offer of settlement and the order of acceptance shall be forwarded to the National Adjudicatory Council to accept or reject.
      (1) A proposed order of acceptance shall make findings of fact, including a statement of the rule, regulation, or statutory provision violated, and impose sanctions (including, if applicable, a permanent cease and desist order) consistent with the terms of the offer of settlement.
      (2) Before an offer of settlement and an order of acceptance shall become effective, they shall be submitted to and accepted by the National Adjudicatory Council. The Review Subcommittee or the Office of Disciplinary Affairs may accept such offer of settlement and order of acceptance or refer them to the National Adjudicatory Council for acceptance or rejection by the National Adjudicatory Council. The Review Subcommittee may reject such offer of settlement and order of acceptance or refer them to the National Adjudicatory Council for acceptance or rejection by the National Adjudicatory Council.
      (3) If the offer of settlement and order of acceptance are accepted by the National Adjudicatory Council, the Review Subcommittee, or the Office of Disciplinary Affairs, they shall become final and the Director of the Office of Disciplinary Affairs shall issue the order and notify the Office of Hearing Officers. The Department of Enforcement shall provide a copy of an issued order of acceptance to each FINRA member with which a Respondent is associated.
      (f) Contested Offers of Settlement
      If a Respondent makes an offer of settlement and the Department of Enforcement opposes it, the offer of settlement is contested. When the Department of Enforcement opposes an offer of settlement, the Respondent's written offer and the Department of Enforcement's written opposition shall be submitted to a Hearing Panel or, if applicable, an Extended Hearing Panel. The Hearing Panel or, if applicable, the Extended Hearing Panel, may order the Department of Enforcement and the Respondent to attend a settlement conference.
      (1) If a contested offer of settlement is approved by the Hearing Panel or, if applicable, Extended Hearing Panel, the Hearing Officer shall draft an order of acceptance of the offer of settlement. The order of acceptance shall make findings of fact, including a statement of the rule, regulation, or statutory provision violated, and impose sanctions (including, if applicable, a permanent cease and desist order) consistent with the terms of the offer of settlement. The offer of settlement, any written opposition thereto, and the order of acceptance shall be forwarded to the National Adjudicatory Council to accept or reject.
      (2) Before an offer of settlement and order of acceptance shall become effective, they shall be submitted to, and accepted by, the National Adjudicatory Council. The Review Subcommittee may accept or reject such offer of settlement and order of acceptance or refer them to the National Adjudicatory Council for acceptance or rejection by the National Adjudicatory Council.
      (3) If the offer of settlement and order of acceptance are accepted by the National Adjudicatory Council or the Review Subcommittee, the General Counsel shall issue the order, notify the Office of Hearing Officers, and provide a copy of an issued order of acceptance to each FINRA member with which a Respondent is associated.
      (g) Final Disciplinary Action of FINRA
      The proceeding shall conclude as of the date the order of acceptance is issued. The order of acceptance shall constitute final disciplinary action of FINRA. The sanction shall take effect as set forth in the order.
      (h) Rejection of Offer of Settlement
      If an uncontested offer of settlement or an order of acceptance is rejected by the Hearing Panel or, if applicable, the Extended Hearing Panel, the Review Subcommittee, or the National Adjudicatory Council, the Respondent shall be notified in writing and the offer of settlement and proposed order of acceptance shall be deemed withdrawn. If a contested offer of settlement or an order of acceptance is rejected by the Hearing Panel or, if applicable, the Extended Hearing Panel, the Review Subcommittee, or the National Adjudicatory Council, the Respondent shall be notified in writing and the offer of settlement and proposed order of acceptance shall be deemed withdrawn. The rejected offer and proposed order of acceptance shall not constitute a part of the record in any proceeding against the Respondent making the offer.
      (i) Disciplinary Proceeding With Multiple Respondents
      When a disciplinary proceeding names multiple Respondents, settlement offers may be accepted or rejected as to any one or all of the Respondents submitting offers. The proceedings shall thereafter be terminated as to those Respondents whose offers of settlement are accepted, but such Respondents may be required to participate in any hearing conducted as to those Respondents that did not submit offers of settlement or whose offers of settlement were rejected.
      (j) No Prejudice from Rejected Offer of Settlement
      If an offer of settlement is rejected by a Hearing Panel or, if applicable, an Extended Hearing Panel, the Review Subcommittee, or the National Adjudicatory Council, the Respondent shall not be prejudiced by the offer, which may not be introduced into evidence in connection with the determination of the issues involved in the pending complaint or in any other proceeding.
      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-2001-58 eff. Sept. 24, 2001.
      Amended by SR-NASD-99-76 eff. Sept. 11, 2000.
      Amended by SR-NASD-98-57 eff. March 26, 1999.
      Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
      Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

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

    • 9280. Contemptuous Conduct

      (a) Persons Subject to Sanctions
      If a Party, attorney for a Party, or other person authorized to represent others by Rule 9141, engages in conduct in violation of an order of a Hearing Officer, a Hearing Panel or, if applicable, an Extended Hearing Panel, or other contemptuous conduct during a proceeding, a Hearing Officer, Hearing Panel or, if applicable, an Extended Hearing Panel, may:
      (1) subject the Party, attorney for a Party, or other person authorized to represent others by Rule 9141, to the sanctions set forth in paragraph (b); and
      (2) exclude an attorney for a Party, or other person authorized to represent others by Rule 9141, under Rule 9150.
      (b) Sanctions Other Than Exclusion
      A Hearing Officer, Hearing Panel or, if applicable, an Extended Hearing Panel, may make such orders as are just in regard to a Party, an attorney for a Party, or other person authorized to represent others by Rule 9141.
      (1) Such orders may include:
      (A) an order providing that the matters on which the order is made or any other designated facts shall be taken to be established for the purposes of the disciplinary proceeding in accordance with the claim of the Party obtaining the order;
      (B) an order providing that the disobedient Party may not support or oppose designated claims or defenses, or may not introduce designated matters in evidence;
      (C) an order providing that pleadings or a specified part of the pleading shall be stricken, or an order providing that the proceeding shall be stayed until the Party subject to the order obeys it;
      (D) in lieu of any of the foregoing orders or in addition thereto, an order providing that contemptuous conduct includes the failure to obey any order; and
      (E) an order as provided in subparagraphs (A), (B), and (C) where a Party has failed to comply with an order to produce a person for examination, unless the Party failing to comply shows that such Party is unable to produce such person for examination.
      (2) A Party that without substantial justification fails to disclose information required by the Rule 9240 Series and the Rule 9250 Series or otherwise required by order of the Hearing Officer, Hearing Panel or, if applicable, the Extended Hearing Panel, shall not, unless such failure is harmless, be permitted to use as evidence at a hearing, in a motion or in any other filing of papers, or in oral argument, any witness or information not so disclosed. In addition to, or in lieu of this sanction, the Hearing Officer, Hearing Panel or, if applicable, the Extended Hearing Panel, on motion and after affording an opportunity to be heard, may impose other appropriate sanctions. These sanctions may include any of the sanctions provided for in paragraphs (b)(1)(A) through (C).
      (c) National Adjudicatory Council Review of Exclusions
      If an attorney for a Party, or other person authorized to represent others by Rule 9141, is excluded from a disciplinary hearing or conference, or any portion thereof, such attorney or other person may seek review of the exclusion by filing a motion to vacate with the National Adjudicatory Council. Such motion to vacate shall be filed and served on all Parties within five days after service of the exclusion order. Any response shall be filed with the National Adjudicatory Council and served on all Parties within five days after the service of the motion to vacate. The National Adjudicatory Council or the Review Subcommittee shall consider such motion on an expedited basis and promptly issue a written order. The filing of a motion to vacate shall stay all aspects of the disciplinary proceeding until at least seven days after service of the order of the National Adjudicatory Council or the Review Subcommittee. The review proceedings shall be conducted on the basis of the written record without oral argument.
      (d) Adjournment
      The hearing, conferences, or other activities relating to the disciplinary proceeding shall be stayed pending the review by the National Adjudicatory Council or the Review Subcommittee of an exclusion order in paragraph (c). In the event that the National Adjudicatory Council or the Review Subcommittee upholds an exclusion of an attorney or other person authorized to represent others by Rule 9141, the Hearing Officer may, upon motion by a Party represented by an attorney or other person subject to an order of exclusion, grant an adjournment to allow the retention of new counsel or selection of a new representative. In determining whether to grant an adjournment or the length of an adjournment, the Hearing Officer shall consider whether there are other counsel or representatives of record on behalf of the Party, the availability of other counsel or other members of an excluded attorney's firm, or the availability of other representatives for the Party, and any other relevant factors.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
      Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

      Selected Notice: 08-57.

    • 9290. Expedited Disciplinary Proceedings

      For any disciplinary proceeding, the subject matter of which also is subject to a temporary cease and desist proceeding initiated pursuant to Rule 9810 or a temporary cease and desist order, hearings shall be held and decisions shall be rendered at the earliest possible time. An expedited hearing schedule shall be determined at a pre-hearing conference held in accordance with Rule 9241.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-98-80 eff. June 23, 2003.

      Selected Notices: 03-35, 08-57.

    • 9291. Permanent Cease and Desist Orders

      (a) Content, Scope and Form Requirements
      When a decision issued under Rule 9268 or Rule 9269 or an order of acceptance issued under Rule 9270 imposes a permanent cease and desist order, it shall:
      (1) order a Respondent (and any successor of a Respondent, where the Respondent is a member firm) to cease and desist permanently from violating a specific rule or statutory provision;
      (2) set forth the violation; and
      (3) describe in reasonable detail the act or acts the Respondent (and any successor of a Respondent, where the Respondent is a member firm) shall take or refrain from taking.
      (b) Delivery Requirement
      Where a Respondent is a member firm, Respondent shall deliver a copy of a permanent cease and desist order, within one business day of receiving it, to its associated persons.
      Adopted by SR-FINRA-2015-019 eff. Nov. 2, 2015.

      Selected Notice: 15-35.