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  • Immediately Effective Rule Changes Pending SEC Notification

    • SR-FINRA-2018-021

      • ARTICLE I DEFINITIONS

        When used in these By-Laws, unless the context otherwise requires, the term:
        (a) "Act" means the Securities Exchange Act of 1934, as amended;
        (b) "Board" means the Board of Directors of FINRA Regulation;
        (c) "broker" shall have the same meaning as in Section 3(a)(4) of the Act;
        (d) "Commission" means the Securities and Exchange Commission;
        (e) "Corporation" means the Financial Industry Regulatory Authority, Inc., the National Association of Securities Dealers, Inc., or any future name of the entity;
        (f) "day" means calendar day;
        (g) "dealer" shall have the same meaning as in Section 3(a)(5) of the Act;
        (h) "Delaware law" means the General Corporation Law of the State of Delaware;
        (i) "Delegation Plan" means the "Plan of Allocation and Delegation of Functions by FINRA to FINRA Regulation, Inc." as approved by the Commission, and as amended from time to time;
        (j) "Director" means a member of the Board;
        (k) "district" means a district established by the Board pursuant to Article VIII, Section 8.1 of these By-Laws;
        (l) "District Director" means a FINRA Regulation staff member who heads a district office;
        (m) "district office" means an office of FINRA Regulation located in a district;
        (n) "Electronic transmission" means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process;
        (o) "Executive Representative" means the executive representative of a FINRA member appointed pursuant to Article IV, Section 3 of the FINRA By-Laws;
        (p) "FINRA" means the Financial Industry Regulatory Authority, Inc.;
        (q)"FINRA Board" means the FINRA Board of Governors;
        (r) "FINRA member" means any broker or dealer admitted to membership in FINRA. For purposes of the Code of Arbitration Procedure for Customer Disputes or the Code of Arbitration Procedure for Industry Disputes, FINRA members include any broker or dealer admitted to membership in FINRA whether or not the membership has been terminated or cancelled; and any broker or dealer admitted to membership in a self-regulatory organization that, with FINRA consent, has required its members to arbitrate pursuant to the Code of Arbitration Procedure for Customer Disputes or the Code of Arbitration Procedure for Industry Disputes and/or to be treated as members of FINRA for purposes of the Codes of Arbitration Procedure, whether or not the membership has been terminated or cancelled;
        (s) "FINRA Regulation" means FINRA Regulation, Inc.;
        (t) “Governor” means a member of the FINRA Board;
        (u) "Independent Agent" means a corporation or entity selected by the Secretary of FINRA or FINRA Regulation to assist FINRA Regulation with nomination and election procedures under Articles VI and VIII of these By-Laws and the representatives of such corporation or entity;
        (v) "Industry Director" means a Director of the Board (other than the Chairman of the FINRA Board and the Chief Executive Officer of FINRA) who (1) is or has served in the prior year as an officer, director (other than as an independent director), employee, or controlling person of a broker or dealer, or (2) has a consulting or employment relationship with or provides professional services to a self-regulatory organization registered under the Act, or has had any such relationship or provided any such services at any time within the prior year;
        (w) “Industry Member” means a National Adjudicatory Council or committee member who (1) is or has served in the prior year as an officer, director, employee, or controlling person of a broker or dealer, excluding an independent director, an outside director, or a director not engaged in the day-to-day management of a broker or dealer; (2) is an officer, director (excluding an outside director), or employee of an entity that owns more than ten percent of the equity of a broker or dealer, and the broker or dealer accounts for more than five percent of the gross revenues received by the consolidated entity; (3) owns more than five percent of the equity securities of any broker or dealer, whose investments in brokers or dealers exceed ten percent of his or her net worth, or whose ownership interest otherwise permits him or her to be engaged in the day-to-day management of a broker or dealer; (4) provides professional services to brokers or dealers, and such services constitute 20 percent or more of the professional revenues received by the member or 20 percent or more of the gross revenues received by the member's firm or partnership (for the purposes of determining membership on the National Arbitration and Mediation Committee, any services provided in the capacity as a mediator of disputes involving a broker or dealer and not representing any party in such mediations shall not be considered professional services provided to brokers or dealers); (5) provides professional services to a director, officer, or employee of a broker, dealer, or corporation that owns 50 percent or more of the voting stock of a broker or dealer, and such services relate to the director's, officer's, or employee's professional capacity and constitute 20 percent or more of the professional revenues received by the member or 20 percent or more of the gross revenues received by the member's firm or partnership (for the purposes of determining membership on the National Arbitration and Mediation Committee, any services provided in the capacity as a mediator of disputes involving a director, officer, or employee as described in this subsection (5) and not representing any party in such mediations shall not be considered professional services provided to such individuals); or (6) has a consulting or employment relationship with or provides professional services to a self-regulatory organization registered under the Act, or has had any such relationship or provided any such services at any time within the prior year;
        (x) “Large Firm” means any broker or dealer admitted to membership in the Corporation which, at the time of determination, has 500 or more registered persons;
        (y) “Large Firm NAC Member” or “Large Firm Committee Member” means a National Adjudicatory Council or committee member that must, in order to be eligible to serve, be an Industry Member and, at the time of election or appointment, must be registered with a member which is a Large Firm;
        (z) “Mid-Size Firm” means any broker or dealer admitted to membership in the Corporation which, at the time of determination, has at least 151 and no more than 499 registered persons;
        (aa) “Mid-Size Firm NAC Member” or “Mid-Size Firm Committee Member” means a National Adjudicatory Council or committee member that must, in order to be eligible to serve, be an Industry Member and, at the time of election or appointment, must be registered with a member which is a Mid-Size Firm;
        (bb) "National Adjudicatory Council" or “NAC” means a body appointed pursuant to Article V of these By-Laws.
        (cc) "Nominating Committee" means the Nominating Committee appointed pursuant to Article VII, Section 9 of the FINRA By-Laws;
        (dd) "Non-Industry Member" means a National Adjudicatory Council or committee member who is (1) a Public Member; (2) an officer or employee of an issuer of securities listed on a market for which FINRA provides regulation; (3) an officer or employee of an issuer of unlisted securities that are traded in the over-the-counter market; or (4) any other individual who would not be an Industry Member;
        (ee) "person associated with a member" or "associated person of a member" means: (1) a natural person who is registered or has applied for registration under the Rules of the Corporation; (2) a sole proprietor, partner, officer, director, or branch manager of a member, or other natural person occupying a similar status or performing similar functions, or a natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by a member, whether or not any such person is registered or exempt from registration with FINRA under these By-Laws or the Rules of the Corporation; and (3) for purposes of Rule 8210, any other person listed in Schedule A of Form BD of a member;
        (ff) "Public Director" means a Director of the Board who is not an Industry Director and who otherwise has no material business relationship with a broker or dealer or a self-regulatory organization registered under the Act (other than serving as a public director of such a self-regulatory organization);
        (gg) “Public Member” means a National Adjudicatory Council or committee member who has no material business relationship with a broker or dealer or a self-regulatory organization registered under the Act (other than serving as a public director or a public member on a committee of such a self-regulatory organization or, for the purposes of determining membership on the National Arbitration and Mediation Committee, acting in the capacity as a mediator of disputes involving a broker or dealer and not representing any party in such mediations);
        (hh) “Regional Committee” means a Regional Committee elected pursuant to Article VIII of these By-Laws;
        (ii) “Rules of the Corporation” or “Rules” means the numbered rules set forth in the Manual of the Corporation beginning with the Rule 0100 Series, as adopted by the FINRA Board pursuant to the FINRA By-Laws, as hereafter amended or supplemented;
        (jj) “Small Firm” means any broker or dealer admitted to membership in the Corporation which, at the time of determination, has at least one and no more than 150 registered persons; and
        (kk) “Small Firm NAC Member” or “Small Firm Committee Member” means a National Adjudicatory Council or committee member that must, in order to be eligible to serve, be an Industry Member and, at the time of election or appointment, must be registered with a member which is a Small Firm.
        Amended by SR-FINRA-2018-021 eff. May 18, 2018.
        Amended by SR-FINRA-2015-034 eff. Dec. 20, 2015.
        Amended by SR-FINRA-2011-011 eff. April 28, 2011.
        Amended by SR-FINRA-2008-046. eff. Nov. 6, 2008.
        Amended by SR-NASD-2004-110 eff. Dec. 31, 2004.
        Amended by SR-NASD-2001-57 eff. Sept. 12, 2001.
        Amended by SR-NASD-01-13 eff. May 12, 2001.
        Amended by SR-NASD-99-21 eff. July 9, 2000.
        Amended by SR-NASD-99-35 eff. Dec. 1, 1999.
        Amended by SR-NASD-98-56 eff. Oct. 30, 1998.
        Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

        Selected Notice: 99-95, 16-04

      • ARTICLE VIII REGIONAL COMMITTEES

        • Composition of Regional Committees

          Sec. 8.2  (a) A district within its respective region, as established under Section 8.1, shall elect no fewer than six Regional Committee members to serve on the Regional Committee for its respective region, unless otherwise provided by resolution of the Board. A Regional Committee shall consist of no fewer than five and no more than 20 members, unless otherwise provided by resolution of the Board. Subject to the limitation set forth in the immediately preceding sentence, the authorized number of members of a Regional Committee shall be determined from time to time by the Board; provided, however, that no decrease in the authorized number of members of a Regional Committee shall shorten the term of office of any member thereof. Each Regional Committee member of a particular district shall: (1) be associated with a FINRA member eligible to vote in the district-level elections and registered in the capacity of a branch manager or principal or denoted as a corporate officer of the FINRA member; and (2) work for a firm headquartered within the district the Regional Committee member is representing. For purposes of this provision, a FINRA member is headquartered where it designates its main address on the member's Form BD. Members of the Regional Committees shall serve as panelists in disciplinary proceedings in accordance with the Rules of the Corporation. The Regional Committees shall consider and recommend policies and rule changes to the Board. The Regional Committees shall endeavor to educate FINRA members and other brokers and dealers in their respective districts as to the objects, purposes, and work of FINRA and FINRA Regulation in order to foster FINRA members' interest and cooperation.
          (b) A member of a Regional Committee may resign at any time upon giving Notice to the District Director. Any such resignation shall take effect upon receipt of such Notice or at any later time specified therein, provided that notice of resignation at a later date may be made immediately effective at the discretion of the Chief Executive Officer or his or her designee. The acceptance of such resignation shall not be necessary to make such resignation effective.
          (c) In the event of the refusal, failure, neglect, or inability of a member of a Regional Committee to discharge his or her duties, or for any cause affecting the best interests of FINRA Regulation, the sufficiency of which shall be decided by the Regional Committee, the Regional Committee may remove the member by the affirmative vote of two-thirds of the members of the Regional Committee then in office and declare the Regional Committee member's position vacant. The Regional Committee shall notify the Regional Committee member of his or her removal within seven days after the vote. A Regional Committee member who is removed may submit a written appeal of the removal to the Board within 30 days after the date he or she is notified of the removal. The Board may affirm, reverse, or modify the determination of the Regional Committee. A vote of a majority of the Directors then in office shall be required to reverse or modify the action of the Regional Committee.
          (d) In the event of a vacancy in a Regional Committee resulting from death, resignation, removal, or other cause, the Chief Executive Officer or his or her designee shall determine whether such vacancy shall be filled prior to the next regularly scheduled election of Regional Committee members. In the event the Chief Executive Officer or his or her designee determines that a vacancy on a Regional Committee should be filled, the vacancy shall be filled pursuant to Section 8.4.
          Amended by SR-FINRA-2018-021 eff. May 18, 2018.
          Amended by SR-FINRA-2011-011 eff. April 28, 2011.
          Amended by SR-FINRA-2008-046 eff. Nov. 6, 2008.
          Amended by SR-NASD-2005-086 eff. July 5, 2005.
          Amended by SR-NASD-2003-55 eff. Feb. 1, 2004.
          Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

        • Term of Office of Regional Committee Members

          Sec. 8.3  Each regularly elected member of a Regional Committee shall hold office for a "full term" which is the later of three years or until a successor is elected and qualified. Notwithstanding the term of office for a regularly elected Regional Committee member, such member's term shall terminate sooner upon the member's death, resignation, or removal. There is no limit on the number of terms that may be served by a member of a District Committee, except that a Regional Committee member may serve no more than two full terms consecutively.
          Amended by SR-FINRA-2018-021 eff. May 18, 2018.
          Amended by SR-FINRA-2011-011 eff. April 28, 2011.
          Amended by SR-NASD-2003-55 eff. Feb. 1, 2004.
          Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

        • Filling of Vacancies on Regional Committees

          Sec. 8.4  In the event of a vacancy on a Regional Committee prior to the expiration of the Regional Committee member's term of office, and where the Chief Executive Officer or his or her designee determines, pursuant to Section 8.2(d), that such vacancy should be filled, or in the event of a newly created membership on a Regional Committee by virtue of an increase in the authorized number of members thereof, the Regional Committee shall appoint by majority vote an individual who meets the qualification requirements of Section 8.2(a) to fill a vacancy . The appointment by the Regional Committee shall be effective until the next regularly scheduled election, and until such Regional Committee member's successor is elected and qualified. Following the next regularly scheduled election, in the event of a vacancy, the newly elected Regional Committee member shall serve only the duration of the departed Regional Committee member's term, and in the event of a newly created membership, the newly elected Regional Committee member shall serve only the duration of the term for such class of membership.
          Amended by SR-FINRA-2018-021 eff. May 18, 2018.
          Amended by SR-FINRA-2011-011 eff. April 28, 2011.
          Amended by SR-FINRA-2008-046 eff. Nov. 6, 2008.
          Amended by SR-NASD-2003-55 eff. Feb. 1, 2004.
          Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

        • Meetings of Regional Committees

          Sec. 8.5  Meetings of a Regional Committee shall be held in its region, as identified in Schedule A to these By-Laws, at such times and places, upon such notice, and in accordance with such procedures as the Chief Executive Officer or his or her designee in his or her discretion may determine. A quorum of a Regional Committee shall consist of a majority of its members, and any action taken by a majority present at any meeting at which a quorum is present, except as otherwise provided in these By-Laws, shall constitute the action of the Committee. Any or all members of a Regional Committee may participate in any such meeting by means of conference telephone or other communications equipment by means of which all participants can communicate with each other, and such participation shall constitute presence in person at the meeting. Action by a Regional Committee may be taken by consent in writing or by electronic transmission in lieu of a meeting, in which case any action taken by a majority of the Committee shall constitute the action of the Committee.
          Amended by SR-FINRA-2018-021 eff. May 18, 2018.
          Amended by SR-FINRA-2011-011 eff. April 28, 2011.
          Amended by SR-NASD-2003-55 eff. Feb. 1, 2004.
          Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

        • Expenses of Regional Committees

          Sec. 8.6  Funds to meet the regular expenses of each Regional Committee shall be provided by the Board, and all such expenses shall be subject to the approval of the Board.
          Amended by SR-FINRA-2018-021 eff. May 18, 2018.
          Amended by SR-FINRA-2011-011 eff. April 28, 2011.
          Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

        • Solicitation of Candidates and Secretary's Notice to FINRA Members

          Sec. 8.7  The Secretary of FINRA Regulation shall give a Notice of the upcoming election to FINRA members and the Executive Representatives of FINRA members describing the election procedures and stating that FINRA members may submit names of Regional Committee member candidates for consideration to the Secretary of FINRA Regulation.
          Amended by SR-FINRA-2018-021 eff. May 18, 2018.
          Amended by SR-FINRA-2011-011 eff. April 28, 2011.
          Amended by SR-FINRA-2008-046 eff. Nov. 6, 2008.
          Amended by SR-NASD-2003-55 eff. Feb. 1, 2004.
          Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

        • Self-Nomination of Candidates and Vacancy Appointments

          Sec. 8.8  (a) An individual who meets the qualification requirements of Section 8.2(a) wishing to be considered for election to the Regional Committee shall deliver a written Notice to the Secretary of FINRA Regulation within 30 calendar days after the Secretary of FINRA Regulation gives the Notice of the upcoming elections pursuant to Section 8.7. The Secretary of FINRA Regulation shall make a written record of the time and date of the receipt of each Notice from a qualified individual, and designate that individual as a candidate.
          (b) In the event that no candidate is designated for a particular Regional Committee vacancy, the Chief Executive Officer or his or her designee shall appoint an individual who meets the qualification requirements of Section 8.2(a) to fill that vacancy for a full term.
          Amended by SR-FINRA-2018-021 eff. May 18, 2018.
          Adopted by SR-FINRA-2011-011 eff. April 28, 2011.

        • FINRA Members Eligible to Vote

          Sec. 8.9  A FINRA member that is headquartered in the district shall be eligible to cast one vote through the FINRA member's Executive Representative for each position to be filled in the election representing that district on the Regional Committee. For purposes of this provision, a FINRA member is headquartered where it designates its main address on the member's Form BD.
          Amended by SR-FINRA-2018-021 eff. May 18, 2018.
          Amended by SR-FINRA-2011-011 eff. April 28, 2011.
          Amended by SR-FINRA-2008-046 eff. Nov. 6, 2008.
          Amended by SR-NASD-2003-55 eff. Feb. 1, 2004.
          Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

        • Administrative Support

          Sec. 8.10  The Secretary of FINRA Regulation shall provide administrative support to all candidates, according to procedures published by the Secretary. Any candidate may also send communications to FINRA members eligible to vote in the district at the candidate's own expense, provided that such communications clearly state that they represent the opinions of the candidate. Except as provided in this Article, FINRA Regulation, the Board, any committee, and FINRA Regulation staff shall not provide any other administrative support to a candidate in the election.
          Amended by SR-FINRA-2018-021 eff. May 18, 2018.
          Amended by SR-FINRA-2011-011 eff. April 28, 2011.
          Amended by SR-FINRA-2008-046 eff. Nov. 6, 2008.
          Amended by SR-NASD-2003-55 eff. Feb. 1, 2004.
          Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

        • Vote Qualification List

          Sec. 8.12  Eligibility to vote in a district-level election shall be based on FINRA's membership records as of a date selected by the Secretary of FINRA Regulation that is not more than 30 days before the date of mailing of the ballot. The Secretary of FINRA Regulation shall prepare a list of FINRA members eligible to vote in the district, their mailing addresses, and their Executive Representatives, which shall be used for vote qualification purposes, and shall provide the applicable list to candidates upon request.
          Amended by SR-FINRA-2018-021 eff. May 18, 2018.
          Amended by SR-FINRA-2011-011 eff. April 28, 2011.
          Amended by SR-FINRA-2008-046 eff. Nov. 6, 2008.
          Amended by SR-NASD-2003-55 eff. Feb. 1, 2004.
          Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

        • General Procedures for Qualification and Accounting of Ballots

          Sec. 8.14  After the close of the voting period, the Independent Agent shall tabulate the ballots and notify the Secretary of FINRA Regulation of the voting results for each Regional Committee position subject to election within 14 calendar days after the return date specified on the ballot pursuant to Section 8.11.
          Amended by SR-FINRA-2018-021 eff. May 18, 2018.
          Amended by SR-FINRA-2011-011 eff. April 28, 2011.
          Amended by SR-FINRA-2008-046 eff. Nov. 6, 2008.
          Amended by SR-NASD-2003-55 eff. Feb. 1, 2004.
          Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

        • Election Results

          Sec. 8.17  The Independent Agent shall count the votes received for each candidate in a district. The district-level candidates for the office of member of the Regional Committee receiving the largest number of votes cast by FINRA members eligible to vote in the district for the office shall be declared elected such that the number of candidates declared elected corresponds to the number and of positions on the Regional Committee subject to the district-level election. In the event of a tie, there shall be a run-off election. The Secretary of FINRA Regulation shall notify the Board of the election results. The notification shall state the number of votes received by each candidate and the number of ballots set aside.
          Amended by SR-FINRA-2018-021 eff. May 18, 2018.
          Amended by SR-FINRA-2011-011 eff. April 28, 2011.
          Amended by SR-FINRA-2008-046 eff. Nov. 6, 2008.
          Amended by SR-NASD-2003-55 eff. Feb. 1, 2004.
          Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      • ARTICLE IX COMPENSATION

        • Compensation of Board, Council, and Committee Members

          Sec. 9.1  The Board may provide for reasonable compensation of the Chair of the Board, the Directors, National Adjudicatory Council members, and the members of any committee of the Board or any Regional Committee. The Board may also provide for reimbursement of reasonable expenses incurred by such persons in connection with the business of FINRA Regulation.
          Amended by SR-FINRA-2018-021 eff. May 18, 2018.
          Amended by SR-FINRA-2008-046 eff. Nov. 6, 2008.
          Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      • 9120. Definitions

        (a) "Adjudicator"
        The term "Adjudicator" means:
        (1) a body, board, committee, group, or natural person that presides over a proceeding and renders a decision;
        (2) a body, board, committee, group, or natural person that presides over a proceeding and renders a recommended or proposed decision which is acted upon by an Adjudicator described in paragraph (a)(1); or
        (3) a natural person who serves on a body, board, committee, or group described in paragraphs (a)(1) or (2).
        The term includes a Review Subcommittee as defined in paragraph (aa), a Subcommittee as defined in paragraph (cc), an Extended Proceeding Committee as defined in paragraph (l), and a Statutory Disqualification Committee as defined in paragraph (bb).
        (b) "Chief Hearing Officer"
        The term "Chief Hearing Officer" means the Hearing Officer designated by the Chief Executive Officer of FINRA to manage the Office of Hearing Officers, or his or her delegatee.
        (c) "Code"
        The term "Code" refers to the Code of Procedure.
        (d) "Counsel to the National Adjudicatory Council "
        The term "Counsel to the National Adjudicatory Council" means an attorney of the Office of the General Counsel of FINRA who is responsible for advising the National Adjudicatory Council, the Review Subcommittee, a Subcommittee, or an Extended Proceeding Committee regarding a disciplinary proceeding on appeal or review before the National Adjudicatory Council.
        (e) "Department of Enforcement"
        The term "Department of Enforcement" means the Department of Enforcement of FINRA.
        (f) "Director"
        The term "Director" means a member of the Board of Directors of FINRA Regulation.
        (g) "District Committee"
        The term "District Committee" means a former district committee elected pursuant to the FINRA Regulation By-Laws or a resolution of the FINRA Regulation Board.
        (h) "Document"
        The term "Document" means a writing, drawing, graph, chart, photograph, recording, or any other data compilation, including data stored by computer, from which information can be obtained.
        (i) "Extended Hearing"
        The term "Extended Hearing" means a disciplinary proceeding described in Rule 9231(c).
        (j) "Extended Hearing Panel"
        The term "Extended Hearing Panel" means an Adjudicator that is constituted under Rule 9231(c) to conduct a disciplinary proceeding that is classified as an "Extended Hearing" and is governed by the Rule 9200 Series.
        (k) "Extended Proceeding"
        The term "Extended Proceeding" means a disciplinary proceeding described in Rule 9331(a)(2).
        (l) "Extended Proceeding Committee"
        The term "Extended Proceeding Committee" means an appellate Adjudicator that is constituted under Rule 9331 to participate in the National Adjudicatory Council's consideration of a disciplinary proceeding that is classified as an "Extended Proceeding" and governed by the Rule 9300 Series.
        (m) "FINRA Board"
        The term "FINRA Board" means the Board of Governors of FINRA.
        (n) "FINRA Regulation Board"
        The term "FINRA Regulation Board" means the Board of Directors of FINRA Regulation.
        (o) "General Counsel"
        The term "General Counsel" means the Chief Legal Officer or General Counsel of FINRA, or his or her delegatee, who shall be a person who reports to the Chief Legal Officer or General Counsel of FINRA and is an Associate General Counsel, an Assistant General Counsel, or a person who has substantially the same or equivalent duties and responsibilities as an Associate General Counsel or an Assistant General Counsel.
        (p) "Governor"
        The term "Governor" means a member of the Board of Governors of FINRA.
        (q) "Head of Enforcement"
        The term "Head of Enforcement" means the individual designated by the Chief Executive Officer of FINRA to manage the Department of Enforcement, or his or her delegatee in the Department of Enforcement.
        (r) "Hearing Officer"
        The term "Hearing Officer" means an employee of FINRA, or former employee of FINRA who previously acted as a Hearing Officer, who is an attorney and who is appointed by the Chief Hearing Officer to act in an adjudicative role and fulfill various adjudicative responsibilities and duties described in the Rule 9200 Series regarding disciplinary proceedings, the Rule 9550 Series regarding expedited proceedings, the Rule 9700 Series relating to grievances concerning FINRA automated systems, and the Rule 9800 Series regarding temporary cease and desist proceedings brought against members and associated persons.
        (s) "Hearing Panel"
        The term "Hearing Panel" means an Adjudicator that is constituted under Rule 9231 to conduct a disciplinary proceeding governed by the Rule 9200 Series, that is constituted under the Rule 9520 Series or the Rule 9550 Series to conduct a proceeding, or that is constituted under the Rule 9800 Series to conduct a temporary cease and desist proceeding.
        (t) "Interested FINRA Staff"
        The term "Interested FINRA Staff" means, in the context of:
        (1) a disciplinary proceeding under the Rule 9200 Series and the Rule 9300 Series:
        (A) the Head of Enforcement;
        (B) an employee of the Department of Enforcement who reports, directly or indirectly, to the Head of Enforcement;
        (C) a FINRA employee who directly participated in the authorization of the complaint;
        (D) a FINRA employee who directly participated in an examination, investigation, prosecution, or litigation related to a specific disciplinary proceeding, and a district director or department head to whom such employee reports;
        (E) the Head of the Department of Market Regulation; or
        (F) an employee of the Department of Market Regulation who reports, directly or indirectly, to the Head of the Department of Market Regulation;
        (2) a proceeding under the Rule 9520 Series or Rule 9550 Series:
        (A) the head of the department or office that issues the notice or petition or is designated as a Party;
        (B) a FINRA employee who reports, directly or indirectly, to such person;
        (C) a FINRA employee who directly participated in the authorization or initiation of the proceeding; or
        (D) a FINRA employee who directly participated in an examination, investigation, prosecution, or litigation related to a specific proceeding, and a district director or department head to whom such employee reports;
        (3) a proceeding under the Rule 9600 Series:
        (A) the head of the department or office that issues the decision granting or denying an exemption or is designated as a Party;
        (B) a FINRA employee who reports, directly or indirectly, to such person;
        (C) a FINRA employee who directly participated in the exemption proceeding; or
        (D) a FINRA employee who directly participated in an examination, investigation, prosecution, or litigation related to a specific exemption proceeding, and a district director or department head to whom such employee reports; or
        (4) a proceeding under the Rule 9800 Series:
        (A) the Head of Enforcement;
        (B) an employee of the Department of Enforcement who reports, directly or indirectly, to the Head of Enforcement;
        (C) a FINRA employee who directly participated in the authorization of the notice that initiates a temporary cease and desist proceeding;
        (D) a FINRA employee who directly participated in an examination, investigation, prosecution, or litigation related to a specific temporary cease and desist proceeding, and a district director or department head to whom such employee reports;
        (E) the Head of the Department of Market Regulation; or
        (F) an employee of the Department of Market Regulation who reports, directly or indirectly, to the Head of the Department of Market Regulation.
        (u) "Market Regulation Committee"
        The term "Market Regulation Committee" means the committee of FINRA designated to consider the federal securities laws and the rules and regulations adopted thereunder and various FINRA rules and policies relating to:
        (1) the quotations of securities;
        (2) the execution of transactions;
        (3) the reporting of transactions; and
        (4) trading practices, including rules prohibiting manipulation and insider trading, and trading-related rules such as FINRA Rule 4560 and FINRA Rules 5200, 6000, 7100, 7200, 7300 and 7400 Series.
        (v) "Office of Disciplinary Affairs"
        The term "Office of Disciplinary Affairs" means the Office of Disciplinary Affairs for FINRA.
        (w) "Panelist"
        The term "Panelist," as used in the Rule 9200 Series, the Rule 9550 Series, and the Rule 9800 Series, means a member of a Hearing Panel or Extended Hearing Panel who is not a Hearing Officer. As used in the Rule 9300 Series, the term means a current or former member of the National Adjudicatory Council or a former Director or a former Governor who is appointed to serve on a Subcommittee or an Extended Proceeding Committee.
        (x) "Party"
        With respect to a particular proceeding, the term "Party" means:
        (1) in the Rule 9200 Series, the Rule 9300 Series, and the Rule 9800 Series, the Department of Enforcement or the Department of Market Regulation or a Respondent;
        (2) in the Rule 9520 Series, the Department of Member Regulation or a member that is the subject of a notice or files an application under Rule 9522;
        (3) in the Rule 9550 Series, the FINRA department or office that issued the notice or, if another FINRA department or office is named as the party handling the matter on behalf of the issuing department or office, the FINRA department or office that is so designated or a member or person that is the subject of a notice under the Rule 9550 Series; or
        (4) in the Rule 9600 Series, the department or office designated under Rule 9620 to issue the decision granting or denying an exemption or a member that seeks the exemption under Rule 9610.
        (y) "Primary Regional Committee"
        The term "Primary Regional Committee" means, in a disciplinary proceeding under the Rule 9200 Series, the Regional Committee designated by the Chief Hearing Officer pursuant to Rule 9232 to provide one or more of the Panelists to a Hearing Panel or, if applicable, to an Extended Hearing Panel, for such disciplinary proceeding.
        (z) "Regional Committee"
        The term "Regional Committee" means a regional committee elected pursuant to the FINRA Regulation By-Laws or a resolution of the FINRA Regulation Board.
        (aa) "Respondent"
        The term "Respondent" means, in a disciplinary proceeding governed by the Rule 9200 Series and in an appeal or review governed by the Rule 9300 Series, a FINRA member or associated person against whom a complaint is issued. In a proceeding governed by the Rule 9800 Series, the term "Respondent" means a FINRA member or associated person that has been served a notice initiating a cease and desist proceeding.
        (bb) "Review Subcommittee"
        The term "Review Subcommittee" means a body appointed by the National Adjudicatory Council pursuant to Article V of the FINRA Regulation By-Laws.
        (cc) "Statutory Disqualification Committee"
        The term "Statutory Disqualification Committee" means a Subcommittee of the National Adjudicatory Council that makes a recommended decision to grant or deny an application for relief from the eligibility requirements of FINRA to the National Adjudicatory Council pursuant to the Rule 9520 Series.
        (dd) "Subcommittee"
        The term "Subcommittee" means an Adjudicator that is:
        (1) constituted under Rule 9331(a) to participate in the National Adjudicatory Council's consideration of an appeal or a review of a disciplinary proceeding pursuant to the Rule 9300 Series;
        (2) constituted under Rule 9559(q) or Rule 9630 to conduct a review proceeding.
        Amended by SR-FINRA-2018-021 eff. May 18, 2018.
        Amended by SR-FINRA-2015-019 eff. Nov. 2, 2015.
        Amended by SR-FINRA-2014-031 eff. Aug. 12, 2014.
        Amended by SR-FINRA-2012-054 eff. Dec. 11, 2012.
        Amended by SR-FINRA-2011-024 eff. June 17, 2011.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-2007-052 eff. Aug. 1, 2008.
        Amended by SR-NASD-2005-087 eff. Aug. 1, 2006
        Amended by SR-NASD-2003-110 eff. June 28, 2004.
        Amended by SR-NASD-98-80 eff. June 23, 2003.
        Amended by SR-NASD-2002-97 eff. July 29, 2002.
        Amended by SR-NASD-99-76 eff. Sept. 11, 2000.
        Amended by SR-NASD-98-90 eff. Jan. 1, 1999.
        Amended by SR-NASD-98-13 eff. March 4, 1998.
        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, 03-35, 04-36, 08-34, 08-57, 14-32, 15-35.

      • 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.

      • 9820. Appointment of Hearing Officer and Hearing Panel

        (a) As soon as practicable after the Department of Enforcement or the Department of Market Regulation files a copy of the notice initiating a TCDO Proceeding or a PCDO Proceeding with the Office of Hearing Officers, the Chief Hearing Officer shall assign a Hearing Officer to preside over the proceeding. The Chief Hearing Officer shall appoint two Panelists to serve on a Hearing Panel with the Hearing Officer. Each Panelist shall be associated with a member of FINRA or retired therefrom. The Chief Hearing Officer shall select as a Panelist a person who:
        (1) previously served on a District Committee;
        (2) currently serves or previously served on a Regional Committee;
        (3) previously served on the National Adjudicatory Council;
        (4) 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;
        (5) previously served as a Director or a Governor, but does not currently serve in any of these positions; or
        (6) 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.
        (b) If at any time a Hearing Officer or Hearing Panelist 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, or if a Party files a motion to disqualify a Hearing Officer or Hearing Panelist, the recusal and disqualification proceeding shall be conducted in accordance with Rules 9233 and 9234, except that:
        (1) a motion seeking disqualification of a Hearing Officer or Hearing Panelist must be filed no later than 5 days after the later of the events described in paragraph (b) of Rules 9233 and 9234; and
        (2) the Chief Hearing Officer shall appoint a replacement Panelist using the criteria set forth in paragraph (a) of this Rule.
        Amended by SR-FINRA-2018-021 eff. May 18, 2018.
        Amended by SR-FINRA-2016-043 eff. Dec. 15, 2016.
        Amended by SR-FINRA-2015-019 eff. Nov. 2, 2015.
        Amended by SR-FINRA-2009-035 eff. July 14, 2009.
        Amended by SR-FINRA-2009-034 eff. June 23, 2009.
        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, 15-35, 17-22.