FINRA employs a fair system for disciplining firms and individuals who break the rules. We may take disciplinary action through a settlement, or issue a formal complaint. If a complaint is issued, the case is heard before a panel which is chaired by a professional hearing officer and includes two industry representatives.
At the hearing, the parties present evidence for the Hearing Panel to evaluate in determining whether a firm or individual has engaged in conduct that violates FINRA rules, the federal securities laws, or SEC regulations. The Hearing Panel also considers previous court, SEC, and FINRA's National Adjudicatory Council (NAC) decisions to determine whether violations occurred. The Hearing Panel uses the FINRA Sanction Guidelines to determine appropriate sanctions, and issues a written decision explaining the reasons for its ruling.
A firm or individual has the right to appeal a Hearing Panel decision to the NAC, a body that is equally balanced between individuals who are in the securities business and nonindustry representatives. Unless FINRA's Board of Governors decides to review the NAC's decision, that decision is FINRA's final action in the matter. A firm or individual can appeal FINRA's action to the SEC and then to a federal court.
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