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Guide to Expedited Proceedings

In addition to disciplinary proceedings brought by FINRA’s Department of Enforcement, FINRA’s Office of Hearing Officers (OHO) also hears expedited proceedings, which are governed by Rule 9561 and the Rule 9550 and 9100 Series of FINRA’s Code of Procedure.

The purpose of this Guide is to assist the reader in understanding FINRA’s procedures for expedited proceedings. This Guide is not an interpretation of, or a substitute for reading, the rules for expedited proceedings in FINRA’s Code of Procedure. Nor is the Guide a substitute for legal advice. All participants in FINRA’s expedited proceedings are encouraged to read FINRA’s Code of Procedure and consult legal counsel. This Guide is primarily for pro se (unrepresented) respondents and attorneys unfamiliar with practice before OHO.

OHO administers FINRA expedited proceedings through the OHO Docket Portal, which is an electronic filing system that enables users (parties and participants in FINRA’s expedited cases) to log into a secure system to file and serve documents electronically and view their case information and case-related appointments and deadlines.

Parties in expedited cases before OHO should refer to the OHO Docket Portal User Guide for detailed instructions on using the OHO Docket Portal.

For assistance with the OHO Docket Portal, the process of requesting a hearing in an expedited matter, and expedited proceedings in general email [email protected] or call 202-728-8008 and ask to speak to the Expedited Proceedings Coordinator.

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About OHO

OHO is an independent office of impartial adjudicators (Hearing Officers) who preside over expedited proceedings and other matters. OHO reports to FINRA’s Chief Executive Officer (CEO), maintains strict independence from FINRA’s regulatory and enforcement programs, and is physically separated from other FINRA departments. Hearing Officers are not involved in the investigative process. Furthermore, employment protections exist for Hearing Officers to ensure their independence. Only FINRA’s CEO can terminate a Hearing Officer, and the termination can be appealed to the Audit Committee of FINRA’s Board of Governors.

The Rules for Expedited Proceedings

FINRA’s Rule 9550 Series and FINRA Rule 9561 apply to actions that involve misconduct that could cause harm to the investing public or the integrity of the markets and those that could reasonably be expedited for administrative ease.

These actions proceed more quickly than disciplinary proceedings. The Rule 9550 Series and Rule 9561 require that hearings occur and matters be resolved within a shortened timeframe once a Respondent requests a hearing.

The Rules for expedited proceedings cover several types of actions:

  1. Failure to Comply with Public Communications Standards (Rule 9551)
  2. Failure to Provide Information or Keep Information Current (Rule 9552)
  3. Failure to Pay FINRA Dues, Fees and Other Charges (Rule 9553)
  4. Failure to Comply with an Arbitration Award or Related Settlement or an Order of Restitution or Settlement Providing for Restitution (Rule 9554)
  5. Failure to Meet the Eligibility or Qualification Standards or Prerequisites for Access to Services (Rule 9555)
  6. Failure to Comply with Temporary and Permanent Cease and Desist Orders, or Orders that Impose Conditions or Restrictions (Rule 9556)
  7. Procedures for Regulating Activities under Rule 4110, 4120, and 4130 Regarding a Member Experiencing Financial or Operational Difficulties (Rule 9557)
  8. Summary Proceedings for Actions Authorized by Section 15A(h)(3) of the Securities Exchange Act of 1934 (Rule 9558)
  9. Procedures for Regulating Activities under Rule 4111 (Rule 9561)

The most common actions involve a member firm’s or associated person’s failure to provide FINRA with required information, reports, data or testimony (Rule 9552) and an associated person’s failure to comply with an arbitration award (Rule 9554).

Representation

Individuals in expedited proceedings may appear on their own behalf or through representation by an attorney. A partnership may be represented by a member of the partnership, an attorney, or both. A corporation, trust, or association may be represented by an officer of the entity, an attorney, or both. See Rule 9141.

An attorney who represents a Respondent must file a notice of appearance with OHO through the OHO Docket Portal. See Rule 9141.

Ex Parte Communications

An ex parte communication occurs when the parties to disciplinary or expedited proceedings or their legal representatives communicate with a Hearing Officer or panelist regarding the merits of the proceeding privately and without all other parties having the opportunity to participate. Parties and their representatives may not engage in ex parte communications. The parties to a disciplinary or expedited proceeding and their legal representatives may not communicate with a Hearing Officer or panelist about the merits of the proceeding unless all parties receive prior notice and the opportunity to participate in the communication. A violation of the rule against ex parte communications may result in remedial action that could adversely affect a party’s claims, defenses, and interests in the proceeding.

Notice and Initiation of an Expedited Proceeding

A FINRA department may issue a notice of suspension or other action (Notice) to a Respondent, which can be a member firm or an associated person, under FINRA’s Rule 9550 Series and FINRA Rule 9561. The basis for FINRA’s decision to send the Notice varies by the violation alleged or the action required. The Notice states that the Respondent will be subject to a requirement, restriction, cancellation or sanction (generally, a suspension) unless, before a date specified in the Notice (usually 21 days), the Respondent (1) undertakes a specific action set forth in the Notice or (2) requests a hearing before OHO. Upon receipt of the Notice, a Respondent can request a hearing before OHO by filing a request through the link on OHO's landing page. The request will be fed into the OHO Docket Portal. The Respondent’s Hearing Request initiates the expedited proceeding in OHO. Except for certain expedited proceedings (brought under Rules 9555(d), 9556(h), 9558, and 9561(a)), a Respondent’s timely filing of a Hearing Request in the OHO Docket Portal automatically stays the effectiveness of the Notice. A Hearing Request must set forth with specificity any and all defenses to the Notice. The failure to state a particular defense in a hearing request may result in the Respondent’s being precluded from claiming that defense.

Under the rules for expedited proceedings, if a Respondent timely files a Hearing Request, a hearing must be held within a short time frame. For a Notice issued under Rules 9551 through 9555 and 9561(a), a hearing must be held within 30 days after a Respondent files a Hearing Request in the OHO Docket Portal. When a Respondent files a Hearing Request in response to a Notice issued under Rules 9556 (except Rule 9556(h)), 9558, and 9561(b), a hearing must be held within 14 days after a Respondent files a Hearing Request in the OHO Docket Portal. A hearing must be held within five days of the filing of a Hearing Request in the OHO Docket Portal when the Notice is issued under Rule 9557 and within ten days of the filing of a Hearing Request when the Notice is issued under Rule 9556(h). See Rule 9559(f).

The Notice specifies the time within which the Respondent must file a Hearing Request. If a Respondent fails to timely file a Hearing request, the requirement, restriction, cancellation or sanction (generally, a suspension) specified in the Notice becomes effective and constitutes FINRA’s final action in the matter.

Expedited proceedings under Rule 9554 (Failure to Comply with an Arbitration Award or Related Settlement or an Order of Restitution or Settlement Providing for Restitution) are a common type of expedited proceeding. In an expedited proceeding under Rule 9554, the Hearing Officer will not consider a Respondent’s challenge to an underlying arbitration award. In proceedings under Rule 9554, the Respondent must state their defenses with specificity and prove them during the hearing. Available defenses for Rule 9554 proceedings are:

  1. the Respondent paid the award or fee in full, complied fully with the arbitration or settlement agreement;
  2. the arbitration claimant has agreed to installment payments or has otherwise settled the matter with the Respondent, and the Respondent is current on his obligations;
  3. the Respondent has filed a timely motion to vacate or modify the arbitration award and the motion has not been denied;
  4. the Respondent has filed a petition in bankruptcy court and the bankruptcy proceeding is pending, or the award or remaining amount owed has been discharged by the bankruptcy court; or
  5. only in industry arbitration cases (not involving customers), the Respondent is financially unable to pay the award.

Filing and Service of Papers

Filing Procedure

Unless the assigned Hearing Officer orders an alternate form of filing, the parties shall file documents through the OHO Docket Portal. Users of the OHO Docket Portal should consult the OHO Docket Portal User Guide for guidance on using the Docket Portal.

Form of Papers

FINRA’s Code of Procedure contains specific requirements that must be observed for papers filed with OHO, including the requirement that all submissions have a caption and be signed. See Rules 9136, 9137. If a filing is not signed, the filing may be rejected and not considered. See Rule 9137(b). Electronic signatures are sufficient for complying with FINRA’s requirements.

Service of Papers

Throughout the proceeding, the parties (Enforcement and Respondents) are required to “serve” papers on each other. “Service” is the act of providing copies of the papers to all of the other parties in the proceeding. Unless the presiding Hearing Officer orders an alternate form of service, parties must serve documents on each other through the OHO Docket Portal. OHO serves the parties with Orders, Notices, and Decisions through the OHO Docket Portal.

Certificate of Service

Whenever one party serves papers on the other parties in a proceeding, he or she must file a Certificate of Service with OHO. A Certificate of Service is a signed page that identifies the documents being served, the name of each person served, the date on which service was made, the method of service used, and if service is not being made in person, the address at which service is made. In most expedited cases before OHO, the parties must serve each other through the OHO Docket Portal. See Rule 9134(c). If different methods of service are used for different parties, the Certificate of Service must also state the reason different methods of service were used. The Certificate of Service must be signed by the person who caused the service to be made and attached to each copy of the papers that were served. See Rule 9135(c) and Sample Certificate of Service.

Accommodation for Electronic Filing, Serving, and Receiving Papers

A Respondent lacking access to the necessary technology to file, serve, and receive papers electronically through the OHO Docket Portal may file a motion seeking an accommodation to allow an alternative method of filing and serving papers. The motion must explain the reason for the request and suggest an alternate form of service. The moving party shall file its motion by Express Mail or delivery service with OHO at FINRA’s Office of Hearing Officers, 1700 K Street, NW, Washington, DC 20006. The moving party must serve a copy of the motion on all other parties.

Pre-Hearing Procedures

When a Respondent timely files a Hearing Request with OHO, the Chief Hearing Officer will assign the expedited proceeding to a Hearing Officer. For expedited proceedings initiated under Rules 9553, 9554, 9556(h), and 9561, the appointed Hearing Officer will decide the case. For proceedings initiated under Rules 9551, 9552, 9555, 9556 (except Rule 9556(h)), 9557, and 9558, the Chief Hearing Officer shall appoint a Hearing Panel composed of the appointed Hearing Officer and two industry panelists. The Chief Hearing Officer will select as panelists persons drawn from a pool of current and former securities industry members. Hearing Panelists must meet the qualifications set forth in Rules 9231 and 9232.

OHO’s Chief Hearing Officer assigns Hearing Officers to cases in rotation as practicable. Before Hearing Officers serve on expedited proceedings, they conduct a thorough conflicts check to ensure that they are free of conflicts of interest and no circumstances exist where their fairness might reasonably be questioned. Following appointment, Hearing Officers continue to ensure they are conflict free as new information becomes available in their cases. If a Hearing Officer learns of a conflict of interest or other circumstance in which their fairness might reasonably be questioned, they must inform the Chief Hearing Officer and withdraw from the matter.

In the event a Respondent’s Hearing Request is untimely, the Chief Hearing Officer may reject the Hearing Request and inform the Respondent that the Notice has become FINRA’s final action.

Scheduling

Soon after being assigned to preside over an expedited proceeding, the Hearing Officer will issue a Notice of Hearing and Case Management and Scheduling Order that the parties will receive through the OHO Docket Portal. This Order informs the parties of the date and time of the hearing and establishes deadlines by which the parties must submit pre-hearing materials. The Hearing Officer selects the hearing date and imposes various deadlines without consultation with the parties because the deadlines are largely bound by Rule 9559. The Order will also explain how to file papers and the proper format to use. The Hearing Officer may conduct a pre-hearing conference with the parties, and the parties may request a pre-hearing conference by emailing the Case Administrator assigned to the case.

In a proceeding brought under Rule 9554 (Failure to Comply with an Arbitration Award or Related Settlement or an Order of Restitution or Settlement Providing for Restitution), the Order will give the Respondent a deadline within which he or she must provide Enforcement with a completed financial statement and supporting documents if the Respondent is asserting as a defense (in an industry arbitration not involving customers) an inability to pay the arbitration award. See Sample Financial Statement. At this stage, the Respondent is not required to file this information with OHO. Rather, the Respondent must provide the completed financial statement and supporting documents to Enforcement.

For good cause shown, or with the consent of all parties, the Hearing Officer may extend or shorten any time limits set forth in Rule 9559 (except those relating to Rule 9557). A party may request that a deadline be extended during the pendency of an expedited proceeding by filing in the OHO Docket Portal a written motion stating the reason for the request, demonstrating good cause for an extension, and certifying that the party requesting the extension has conferred with the other party and tried to obtain its consent to the request. Requests by any party for lengthy or multiple extensions of time are strongly disfavored in expedited proceedings.

Enforcement Produces Information to the Respondent

After a Respondent files a timely Hearing Request, Enforcement staff must provide the Respondent all documents that were considered in issuing the Notice (unless a document meets the criteria of Rule 9251(b)(1), or (b)(2)). Enforcement’s production of these documents to a Respondent helps ensure that the Respondent is fully apprised of the facts underlying the Notice and can effectively prepare his or her defense. The deadline for production of these documents will be specified in the Case Management and Scheduling Order and Rule 9559(h).

Because the Rule 9550 Series promotes the quick disposition of matters, and given the nature of the alleged underlying misconduct, the Rules for expedited proceedings do not provide for pre-hearing motions practice.

Pre-Hearing Submissions

The parties in expedited proceedings are obligated to exchange certain information before the hearing and file it with OHO through the OHO Docket Portal. Not less than seven days before the hearing in an action brought under Rules 9551 through 9555, or 9561(a), not less than three days before the hearing in an action under Rules 9556, 9558, or 9561(b), and not less than two business days before the hearing in an action under Rule 9557, the parties must exchange, and file with OHO, their proposed witness lists, exhibit lists, and copies of their proposed exhibits. The Case Management and Scheduling Order provides detailed information on how to prepare these materials. The parties must serve each other and file with OHO through the OHO Docket Portal, unless the appointed Hearing Officer has ordered an alternate method of filing and serving. See Rule 9559(h)(2); Sample Exhibit.

The Hearing Officer or, if applicable, Hearing Panel may direct the parties to submit additional information for consideration. See Rule 9559(j).

Failure to Appear at a Pre-Hearing Conference or Hearing

The failure of a Respondent to appear before the Hearing Officer or Hearing Panel at a pre-hearing conference, or hearing, or to comply with an order of the Hearing Officer requiring production of information to support a defense to the Notice will be considered an abandonment of the Respondent’s defense and a waiver of an opportunity for a hearing. In this event, the Notice will be deemed the final FINRA action. See Rule 9559(m).

The Hearing

The hearing provides Respondents with the opportunity to contest the Notice by providing evidence and arguments supporting their defenses to the statements in the Notice.

Hearings in expedited proceedings may be held by telephone conference, unless the Hearing Officer orders otherwise. See Rule 9559(d)(5). The Hearing Officer may offer the parties, as an alternative, to proceed with the hearing by videoconference. The hearing is transcribed by a court reporter who generates a transcript of the hearing. A Respondent may purchase the transcript of the hearing from the court reporter.

In an expedited proceeding hearing, as with a disciplinary proceeding, each party presents its case by submitting relevant documents and presenting witness testimony.

The Hearing Officer will allow the presentation of evidence that is relevant and material to the disputed issues, but may exclude evidence that is irrelevant, immaterial, unduly repetitious, or unduly prejudicial. Formal rules of evidence do not apply to any hearing in FINRA proceedings. FINRA Rules 9262 and 9263 govern the admission of testimony and documentary evidence. See Rule 9559(i).

Because OHO generally conducts expedited hearings by telephone or video conference, an oath or affirmation cannot be administered in person to each witness. Therefore, every witness who is subject to FINRA jurisdiction or is a FINRA employee must produce a signed and notarized affirmation or affidavit stating that his or her testimony at the hearing will be truthful. See Sample Affidavit. All other witnesses must sign a written declaration stating that their testimony will be truthful. See Sample Declaration. The party presenting the witness is responsible for filing the witness affirmation, affidavit, or declaration.

Post-Hearing Procedures

Timing and Contents of Decision

The Rules for expedited proceedings also provide for deadlines within which a Hearing Officer or Hearing Panel must prepare a written decision. See Rule 9559(o).

For proceedings initiated under Rules 9551 through 9555 and 9561, the Hearing Officer, or the Hearing Officer on behalf of the Hearing Panel, must provide a proposed written decision to the Review Subcommittee of the National Adjudicatory Council (NAC) within 60 days of the close of the hearing.

For proceedings initiated under Rules 9556 and 9558, the Hearing Officer, on behalf the Hearing Panel, must provide a proposed written decision to the NAC’s Review Subcommittee within 21 days of the close of the hearing. For expedited proceedings initiated under Rule 9557, a different set of deadlines apply. See Rule 9559(o)(4). 

In an expedited proceeding heard by a Hearing Panel, the decision is determined by a majority vote of the Hearing Panel. A decision in an expedited proceeding must include findings of fact and conclusions of the Hearing Officer or Hearing Panel regarding the alleged violation or condition specified in the Notice, as well as any sanction, requirement, restriction, cancellation or limitation imposed on the Respondent, and the date they become effective. See Rule 9559(p).

In any action brought under the Rule 9550 Series (other than an action under Rules 9556(h), 9557 and 9561), the Hearing Officer or Hearing Panel may approve, modify, or withdraw any sanctions, requirements, restrictions, or limitations imposed by the Notice. Pursuant to Rule 8310(a), the Hearing Officer or Hearing Panel may also impose any other fitting sanctions. See Rule 9559(n).

In an action initiated under Rule 9556(h) (Failure to Comply with Temporary and Permanent Cease and Desist Orders, or Orders that Impose Conditions or Restrictions), the Hearing Officer may impose any fitting sanction. In an action initiated under Rule 9557 (Procedures for Regulating Activities under Rule 4110, 4120, and 4130 Regarding a Member Experiencing Financial or Operational Difficulties), the Hearing Panel may approve or withdraw the requirements or restrictions imposed by the Notice. In an action initiated under Rule 9561 (Procedures for Regulating Activities under Rule 4111), under subsection (a), the Hearing Officer may approve or withdraw any Rule 4111 requirements or remand the matter to the department that issued the Notice for further consideration, but may not modify any of the Rule 4111 requirements imposed by the Notice or impose any additional requirements, obligations, or restrictions. Under subsection (b) of Rule 9561, the Hearing Officer may approve or withdraw the suspension or cancellation of membership and impose any other fitting sanction.

A Hearing Officer or Hearing Panel may also impose costs on a Respondent for any action brought under the Rule 9550 Series.

For proceedings initiated under the Rule 9550 Series (except Rule 9557), the NAC Review Subcommittee may call for review a proposed decision prepared by a Hearing Officer or Hearing Panel within 21 days after receipt of the decision from OHO. For proceedings initiated under Rule 9557, the NAC Review Subcommittee may call for review a proposed decision prepared by a Hearing Officer, on behalf of a Hearing Panel, within 14 days after receipt of the decision from OHO. See Rule 9559(q).

If the NAC Review Subcommittee timely calls the proceeding for review, a Subcommittee of the NAC meets and conducts a review within 40 days of the call for review. The NAC Subcommittee may hold a hearing or elect to decide the matter based on the record made before the Hearing Officer or Hearing Panel. The NAC Subcommittee must make its recommendation to the full NAC within 60 days after the call for review. The NAC has 60 days to serve a final written decision on the parties. The NAC may affirm, modify, or reverse the decision of the Hearing Officer or Hearing Panel and may impose any other fitting sanction and costs. The NAC also may remand the matter to OHO for further consideration.

If the NAC Review Subcommittee does not timely call a decision in an expedited proceeding for review, the Hearing Officer’s or Hearing Panel’s written decision shall constitute final FINRA action. OHO will serve the parties with the written decision through the OHO Docket Portal and provide copies of the decision to each FINRA member firm with which a Respondent is associated. See Rule 9559(o)(5).

Right to Appeal to the Securities and Exchange Commission (SEC)

Decisions in expedited proceedings are not appealable to the NAC. Instead, a party may appeal a decision issued by a Hearing Officer or Hearing Panel (or by the NAC if the matter was called for review by the NAC Review Subcommittee) by filing an application for review with the SEC within 30 days of receipt of the decision. The filing of an application for review does not stay the effectiveness of the final FINRA action, unless the SEC orders otherwise.