Frequently Asked Questions for Respondents in FINRA Disciplinary Proceedings
FINRA is committed to ensuring that all respondents are treated fairly in the disciplinary process. Below, you will find brief answers to a number of questions frequently asked by respondents. We hope these answers will be helpful in orienting you to the disciplinary process.
FINRA's disciplinary proceedings are governed by the FINRA Code of Procedure (the Code). You should consult the Code to obtain a complete picture of your rights and responsibilities in the disciplinary process. In addition, FINRA's Office of Hearing Officers has prepared a Guide to Disciplinary Hearing Procedures (the Guide), which gives a description of the disciplinary process. FINRA's rules, including the Code, are available at http://www.finra.org/rules. The Guide is available at http://www.finra.org/oho. If you do not have access to FINRA's website, you may request the Office of Hearing Officers to send you copies of the Code and Guide.
During the conference, the Hearing Officer will ask all parties to discuss the case, and the Hearing Officer will try to answer any questions you may have. The Hearing Officer will also ask the parties about convenient dates and locations for the hearing. Based on the specific circumstances of your case, as discussed during the conference, the Hearing Officer will establish a hearing date and a pre-hearing schedule. At a minimum, if you want witnesses to testify at the hearing or if you want to offer documents (referred to as "exhibits"), you will be required to provide a list of your witnesses and exhibits, and copies of the exhibits, to the Hearing Officer and the Department before the hearing. You will also receive a list of all of the Department's witnesses and exhibits, and copies of the Department's propose exhibits before the hearing. Of course, if you ask for a hearing, you must also appear for the hearing at the scheduled date and time. If you fail to appear, you may be held in default. For more information, read the Code, including Rules 9241 and 9242.
All communications made in the mediation proceeding shall be confidential. The mediator will not disclose any details of the settlement communications with the assigned Hearing Officer or the Hearing Panelists.
If you are interested in this service, call the Office of Hearing Officers at (202) 728-8008 and ask to speak to the Case Administrator assigned to your case.
- I have received a Complaint in which the Department of Enforcement or Department of Market Regulation charges me with violating FINRA rules or securities laws. How can I respond?
- Send an Answer to the Complaint to FINRA's Office of Hearing Officers, 1735 K Street, N.W., 2nd Floor, Washington, DC 20006, and a copy to the Department attorney whose name, address, and telephone number are listed in the Notice of Complaint. In addition, you can email your Answer as a .pdf file to the Office of Hearing Officers at [email protected] If you file by email, you must also email your Answer to the Department attorney identified in the Complaint, and you must simultaneously send the signed original Answer along with and three hard copies to the Office of Hearing Officers. For more information, read the Code, including Rules 9133-9138 and 9215.
- What must I include in my Answer?
- You must respond to each allegation in the numbered paragraphs of the Complaint. A general denial of all allegations is not sufficient. Your Answer must admit or deny each allegation separately; you can admit some parts of a paragraph and deny others. If you do not have enough information to enable you to admit or deny an allegation, say so, and it will be treated as a denial. The numbered paragraphs of your Answer should correspond to the numbered paragraphs of the Complaint. You (or your lawyer, if you have one) must sign the Answer, and the Answer must include your (or your attorney's) address and telephone number, as well as an email address if you have one. For more information, read the Code, including Rule 9215.
- How long do I have to file an Answer to the Complaint?
- The deadline for responding to the Complaint is 25 days after it is served on you. This date is stated in the Notice of Complaint. If you have questions about the procedures or deadline for filing, call the Office of Hearing Officers at (202) 728-8008 and ask to speak to the Case Administrator assigned to your case. For more information, read the Code, including Rule 9215.
- What happens if I do not file an Answer?
- If you do not file an Answer by the deadline in the Notice of Complaint, the Department will send you a Second Notice of Complaint. If you do not file an Answer by the deadline in the Second Notice, the Hearing Officer may issue a default decision against you. In a default decision, the Hearing Officer may deem the allegations made by the Department admitted by you and may make findings that you engaged in the alleged misconduct, and violated FINRA rules or the federal securities laws. As a result, you could be fined, suspended from working with a member firm for a specified time, or barred from working with a member firm permanently. For more information, read the Code, including Rules 9215(f) and 9269.
- How do I get a hearing on the charges in the Complaint?
- In your Answer just state, "I request a hearing." For more information, read the Code, including Rule 9221.
- If I ask for a hearing, who will hear my case?
- Answer. Your case will be heard by a three-person Hearing Panel. The panel is chaired by a FINRA Hearing Officer. The Chief Hearing Officer also appoints two industry panelists, drawn primarily from a pool of current and former securities industry members of FINRA's District Committees, as well as its Market Regulation Committee, former members of FINRA's National Adjudicatory Council, and former FINRA Governors. The two industry representatives must be associated with, or retired from association with, a FINRA member firm. When selecting industry panelists, the Chief Hearing Officer considers the following factors: (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 during the past two years. For more information, read the Code, including Rules 9231-9234.
- What is the Office of Hearing Officer's conflicts check procedure for Hearing Panelists?
- Before a Hearing Officer or industry panelist is appointed to serve on a hearing panel, the Office of Hearing Officers evaluates each 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.
- Who is the Hearing Officer and what is his or her role in the proceeding?
- Hearing Officers are attorneys employed by FINRA and assigned to the Office of Hearing Officers. The only function of that Office is to serve as an adjudicator; it is entirely independent of the Department of Enforcement and the Department of Market Regulation. When a Complaint is filed, the Chief Hearing Officer assigns a Hearing Officer to the case. Hearing Officers are assigned to cases in rotation so far as practical, generally employing the same standard set forth for the appointment of administrative judges under 5 U.S. Code § 3105. The Hearing Officer is responsible for overseeing the proceeding to ensure that it is conducted in a fair and efficient manner, much as a judge oversees cases in a court. The Hearing Officer has authority to make all rulings about the schedule, the procedures to be followed, and what evidence will be admitted. The Hearing Officer also serves as Chair of the Hearing Panel. For more information, read the Code, including Rule 9235.
- What happens if I file an Answer, but do not ask for a hearing?
- If you file an Answer, even if you do not ask for a hearing, a Hearing Panel will decide your case. The Hearing Panel will give both the Department and you an opportunity to submit written evidence and arguments. The Hearing Panel can decide the case on the written submissions, or it can order an in-person hearing if it thinks that would be helpful. For more information, read the Code, including Rule 9221.
- Do I have a right to be represented by a lawyer? Can I be represented by someone who is not a lawyer, but is familiar with FINRA procedures?
- You have the right to represent yourself, or, if you prefer, you can be represented by a lawyer. An individual can only be represented by a lawyer, but a corporation, trust, or association may be represented by one of its officers, and a partnership may be represented by one of the partners. For more information, read the Code, including Rule 9141.
- If I want a hearing, is the process complicated?
- No. The most important step is the "pre-hearing conference," which the Hearing Officer will schedule shortly after you file your Answer. The conference is usually held by telephone, and both you (or your lawyer, if you have one) and the Department must participate in the conference. If the Hearing Officer schedules the conference for an inconvenient date or time, call the Office of Hearing Officers at (202) 728-8008 and ask the Case Administrator assigned to your case that it be rescheduled. If you fail to appear by telephone for a pre-hearing conference, you may be held in default.
- What additional rights do I have?
- You have a number of rights under the Code. Most importantly, the Department must make available to you for inspection and copying (at your expense) certain documents prepared or obtained by FINRA staff in connection with the investigation that led to the proceedings against you. This includes FINRA requests for information sent to persons who are not employed by FINRA; any documents provided in response to those requests; any transcripts of testimony taken during the investigation, as well as exhibits to the transcripts; and any other documents obtained from persons not employed by FINRA; any exculpatory evidence right to compel witnesses and produce documents. There are several categories of documents, however, that the Department does not have to produce. To be aware of all your rights under the Code, and the limitations on those rights, you should read the Code carefully, including Rules 9251-9253.
- Are mediation services available? Can I request a mediator be appointed for the purposes of settlement discussions?
- A mediator may be appointed at the parties request. The mediator serves for purposes of conducting and facilitating settlement discussions.
- What happens at the hearing?
- FINRA hearings are less formal than court proceedings, but the hearing process is similar. Usually, the parties are allowed to make "opening statements" to the Panel. Then the Department offers its evidence, which may include the testimony of witnesses or documentary exhibits. You will have an opportunity to question every witness offered by the Department and you can object to any exhibits, and the members of the Panel can also ask questions. When the Department has finished presenting its evidence, you may testify yourself, call your own witnesses to testify, and offer your own documentary exhibits. The Department may question your witnesses or object to your exhibits, and the Panel may also ask questions. When the parties have finished offering evidence, they will usually be allowed to offer "final arguments" to the Panel. For more information, read the Code, including Rules 9261-9267.
- What happens after the hearing?
- After the hearing, the Panel discusses the evidence and reaches a decision. Each member of the Panel has one vote, and if there is a disagreement, a majority vote determines the outcome. The Hearing Officer prepares a written decision setting forth the Panel's decision and explaining the Panel's reasons, which is sent to all the parties. If any member of the Panel disagrees with the decision, he or she may prepare a written dissent, which is also sent to all parties. Any party may appeal the Hearing Panel's decision to FINRA's National Adjudicatory Council within 25 days after service of the decision, or the National Adjudicatory Council can call the decision for review. For more information, read the Code, including Rules 9268, 9311, and 9312.
- Where can I get additional information about the disciplinary process?
- As explained above, you should read the Code and the Guide carefully for detailed answers to all your questions. You may also call the Office of Hearing Officers at (202) 728-8008 and ask to speak to the Case Administrator assigned to your case. The Case Administrator cannot give you legal advice, but can tell you the status of your case and assist you with procedural questions.
- Where can I find significant Orders and Hearing Panel Decisions?
- Significant Orders and Hearing Panel Decisions are available on our website, www.finra.org/oho, and on LEXIS.