Office of Hearing Officers
Under Section 15A(b)(8) of the Securities Exchange Act of 1934, FINRA must provide a fair and impartial procedure for the disciplining of members, and persons associated with members, and the enforcement of FINRA’s rules. Towards this end, FINRA formed the Office of Hearing Officers (OHO), which is an office of impartial adjudicators. OHO serves as FINRA’s “courthouse” for disciplinary and expedited proceedings.
OHO is an independent office within FINRA that employs professional Hearing Officers who preside over disciplinary and expedited actions commenced by FINRA’s Enforcement Department. OHO is located in FINRA’s Washington, D.C. office and is physically separated from other FINRA departments. OHO maintains strict independence from FINRA’s regulatory and enforcement programs. Hearing Officers are not involved in the investigative and examination processes of FINRA.
OHO reports directly to FINRA’s Chief Executive Officer. Furthermore, employment protections exist for Hearing Officers to further ensure their independence. Only FINRA’s Chief Executive Officer can terminate a Hearing Officer, and the termination can be appealed to the Audit Committee of FINRA’s Board of Governors.
The Initiation of Disciplinary and Expedited Proceedings
When the Department of Enforcement chooses to initiate a formal disciplinary action, it files a complaint with OHO and serves the complaint on the respondent. If the respondent files an answer to the complaint, OHO arranges a three-person hearing panel to hear the case. The panel is chaired by a Hearing Officer, an independent adjudicator who is an employee of OHO. The Chief Hearing Officer appoints two industry panelists, drawn from a pool of current and former securities industry members of FINRA’s District and Regional Committees, current and former industry members of its Market Regulation Committee, former industry members of FINRA’s National Adjudicatory Council (NAC), former FINRA Governors, and current and former members of FINRA’s Board advisory committees.
OHO also handles different types of expedited proceedings, which may include temporary cease-and-desist cases, cases involving the failure to pay FINRA dues, fees or other charges, failure to pay arbitration award cases, cases related to restricted firm obligations, and other expedited matters. Some expedited proceedings require the appointment of a three-person panel, similar to disciplinary panels, and others are handled by a Hearing Officer alone.
The Appointment of Hearing Panels; Conflicts Procedures
Before a Hearing Officer or industry panelist is appointed to serve on a Hearing Panel or handle an expedited proceeding, OHO evaluates the candidate to ensure that he or she is free of conflicts of interest, and that there are no circumstances existing where the candidate’s fairness might reasonably be questioned. Following appointment, if a Hearing Officer or an industry panelist learns of a conflict of interest or other circumstance in which his or her fairness might reasonably be questioned, he or she must inform the Chief Hearing Officer and withdraw from the matter.
OHO strictly enforces its conflicts of interest policies and procedures and does not allow the waiver of any conflicts of interest.
When OHO assigns a Hearing Officer to a case, it also assigns a Case Administrator to the matter. Case Administrators in OHO manage case dockets, receive the pleadings that the parties file, transmit orders, notices, and other important documents to parties, and alert parties to issues that require resolution.
Hearing Officers are prohibited from engaging in ex parte communications with a party to a proceeding. (An ex parte communication is a communication with one party while the other party is not present or included in the communication.)
Case Administrators also avoid ex parte communications and cannot provide legal advice to parties in FINRA proceedings. They may, however, answer basic questions about procedural rules and communicate about non-substantive matters with all parties by email.
OHO’s main telephone number: (202) 728-8008
OHO’s Case Administrators:
- Kate Shaffer – (202) 728-8113
- Susan Cadeaux – (202) 728-6916
- Tonya Howe – (202) 728-8349
- Jennifer Rodkey – (202) 728-8898
- Jonelle Williams – (202) 728-8163
General questions unrelated to a specific case may be directed to OHO’s Docket Manager, Reginald Johnson, at (202) 728-8832.
Hearings and Decisions
OHO conducts disciplinary hearings at locations throughout the United States. (For information on disciplinary hearings during the COVID-19 pandemic, visit the Coronavirus Impact on OHO Hearings.) The process for disciplinary hearings is governed by FINRA’s Code of Procedure (FINRA Rule 9100 and Rule 9200 Series), which has been approved by the Securities and Exchange Commission. The Code of Procedure ensures that hearings are conducted fairly, Hearing Panels and Hearing Officers act impartially and objectively, and cases are concluded as expeditiously as possible.
A Hearing Officer administers each case by conducting pre-hearing conferences, ruling on motions and the admissibility of evidence, and issuing decisions in accordance with FINRA’s Code of Procedure. Before each hearing, the parties submit lists of their proposed witnesses and exhibits, together with pre-hearing briefs that set forth summaries of their legal theories.
Hearing Officers also conduct hearings in a variety of expedited proceedings. Hearings in some expedited proceedings occur by telephone or videoconference while others may occur in person, at various locations throughout the country.
At the conclusion of each hearing or shortly thereafter, the Hearing Panel (in cases before a Hearing Panel) deliberates, and the Hearing Officer prepares a draft Hearing Panel decision. The Hearing Panel or Hearing Officer decision includes factual findings, legal conclusions, and when appropriate, sanctions. The Hearing Officer circulates a draft Hearing Panel decision among all panel members, who then have an opportunity to comment upon and edit the draft. The time required to develop and issue a final Hearing Panel or Hearing Officer decision may vary, depending upon many factors, including the complexity of the legal issues in the case, the size of the record, and the nature of the facts in dispute.
Hearing Panel and Hearing Officer decisions and select Hearing Officer orders are posted on OHO’s Decisions and Orders page.
When a Hearing Panel or Hearing Officer (in cases that are before only a Hearing Officer) finds that a respondent has engaged in misconduct, they may impose a variety of sanctions, including the suspension or expulsion of a broker-dealer from FINRA membership, the suspension or bar of an associated person from association with any FINRA member, a fine, an order to pay restitution, an order to disgorge ill-gotten gains, a censure, and a cease-and-desist order. To determine the appropriate sanction to be imposed, the Hearing Panel or Hearing Officer considers the sanctions recommended in FINRA’s Sanction Guidelines.
Parties may appeal a Hearing Panel decision in a disciplinary case to the NAC, which performs a “de novo” review. The NAC can affirm, reverse, modify, set aside, or remand the decision for further proceedings. A respondent may appeal a NAC decision to the Securities and Exchange Commission.
A respondent may appeal a decision in an expedited proceeding to the Securities and Exchange Commission.