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1015. Review by National Adjudicatory Council
This version contains temporary amendments introduced with the filing of SR-FINRA-2020-015 (as extended by SR-FINRA-2020-017, SR-FINRA-2020-022, SR-FINRA-2020-042 and SR-FINRA-2021-006) and SR-FINRA-2020-027 (as extended by SR-FINRA-2020-042 and SR-FINRA-2021-006), which were both filed for immediate effectiveness. The temporary amendments in SR-FINRA-2020-015 and SR-FINRA-2020-027 are in effect through August 31, 2021, pending any future extensions.
(a) Initiation of Review by Applicant
Within 25 days after service of a decision under Rule 1014 or 1017, an Applicant may file a written request for review with the National Adjudicatory Council. A request for review shall state with specificity why the Applicant believes that the Department's decision is inconsistent with the membership standards set forth in Rule 1014, or otherwise should be set aside, and state whether a hearing is requested.
(b) Transmission of Documents
Within ten days after the filing of a request for review, the Department shall:
(1) transmit to the National Adjudicatory Council copies of all documents that were considered in connection with the Department's decision and an index to the documents; and
(2) serve on the Applicant a copy of such documents (other than those documents originally submitted by Applicant) and a copy of the index.
(c) Membership Application Docket
The Department shall promptly record in FINRA's membership application docket each request for review filed with the National Adjudicatory Council under this Rule and each material subsequent event, filing, and change in the status of a membership proceeding.
(d) Appointment of Subcommittee
The National Adjudicatory Council or the Review Subcommittee defined in Rule 9120 shall appoint a Subcommittee to participate in the review. The Subcommittee shall be composed of two or more persons who shall be current or past members of the National Adjudicatory Council or former Directors or Governors.
(e) Powers of Subcommittee
If a hearing is requested, the Subcommittee shall conduct the hearing. If a hearing is not requested, the Subcommittee may serve a notice directing that a hearing be held. If a hearing is not requested or directed, the Subcommittee shall conduct its review on the basis of the record developed before the Department and any written submissions made by the Applicant or the Department in connection with the request for review.
If a hearing is requested or directed, the hearing shall be held within 135 days after the filing of the request with the National Adjudicatory Council or service of the notice by the Subcommittee. The National Adjudicatory Council shall serve written notice of the date and time of the hearing to the Applicant by electronic mail, facsimile or overnight courier not later than 14 days before the hearing.
The Applicant and the Department may be represented by counsel at a hearing conducted pursuant to this Rule.
Formal rules of evidence shall not apply to a hearing under this Rule. Not later than five days before the hearing, the Applicant and the Department shall exchange copies of their proposed hearing exhibits and witness lists and provide copies of the same to the National Adjudicatory Council. If the Applicant or the Department fails to provide copies of its proposed hearing exhibits or witness list within such time, the Subcommittee shall exclude the evidence or witnesses from the proceeding, unless the Subcommittee determines that good cause is shown for failure to comply with the production date set forth in this subparagraph.
The hearing shall be recorded and a transcript prepared by a court reporter. A transcript of the hearing shall be available for purchase from the court reporter at prescribed rates. The Applicant, the Department, or a witness may seek to correct the transcript. A proposed correction of the transcript shall be submitted to the Subcommittee within a reasonable period of time prescribed by the Subcommittee. Upon notice to the Applicant and the Department, the Subcommittee may direct the correction to the transcript as requested or sua sponte.
(5) Video Conference Hearing
Upon consideration of the current public health risks presented by an in-person hearing, the National Adjudicatory Council or Subcommittee may, on a temporary basis, determine that the hearing shall be conducted, in whole or in part, by video conference.
(g) Additional Information, Briefs
At any time during its consideration, the Subcommittee or the National Adjudicatory Council may direct the Applicant or the Department to file additional information or briefs. Any additional information or brief filed shall be provided to all parties before the National Adjudicatory Council renders its decision.
(h) Abandonment of Request for Review
If an Applicant fails to specify the grounds for its request for review under Rule 1015(a)(1), appear at a hearing for which it has notice, or file information or briefs as directed, the National Adjudicatory Council or the Review Subcommittee may dismiss the request for review as abandoned, and the decision of the Department shall become the final action of FINRA. Upon a showing of good cause, the National Adjudicatory Council or the Review Subcommittee may withdraw a dismissal entered pursuant to this paragraph.
(i) Subcommittee Recommendation
The Subcommittee shall present a recommended decision in writing to the National Adjudicatory Council within 150 days after the date of the hearing held pursuant to paragraph (f), and not later than seven days before the meeting of the National Adjudicatory Council at which the membership proceeding shall be considered.
(1) Proposed Written Decision
After considering all matters presented in the review and the Subcommittee's recommended written decision, the National Adjudicatory Council may affirm, modify, or reverse the Department's decision or remand the membership proceeding with instructions. The National Adjudicatory Council shall prepare a proposed written decision pursuant to subparagraph (2).
The decision shall include:
(A) a description of the Department's decision, including its rationale;
(B) a description of the principal issues raised in the review;
(C) a summary of the evidence on each issue; and
(D) a statement whether the Department's decision is affirmed, modified, or reversed, and a rationale therefor that references the applicable standards in Rule 1014.
(3) Issuance of Decision After Expiration of Call for Review Periods
The National Adjudicatory Council shall provide its proposed written decision to the FINRA Board. The FINRA Board may call the membership proceeding for review pursuant to Rule 1016. If the FINRA Board does not call the membership proceeding for review, the proposed written decision of the National Adjudicatory Council shall become final. The National Adjudicatory Council shall serve the Applicant with a written notice specifying the date on which the call for review period expired and stating that the final written decision will be served within 15 days after such date. The National Adjudicatory Council shall serve its final written decision within 15 days after the date on which the call for review period expired. The decision shall constitute the final action of FINRA for purposes of SEA Rule 19d-3, unless the National Adjudicatory Council remands the membership proceeding.
(4) Failure to Issue Decision
If the National Adjudicatory Council fails to serve its final written decision within the time prescribed in subparagraph (3), the Applicant may file a written request with the FINRA Board requesting that the FINRA Board direct the National Adjudicatory Council to serve its decision immediately or to show good cause for an extension of time. Within seven days after the filing of such a request, the FINRA Board shall direct the National Adjudicatory Council to serve its written decision immediately or to show good cause for an extension of time. If the National Adjudicatory Council shows good cause for an extension of time, the FINRA Board may extend the 15 day time limit by not more than 15 days.
|Amended by SR-FINRA-2021-006 eff. April 1, 2021.
Amended by SR-FINRA-2020-042 eff. Dec. 1, 2020.
Amended by SR-FINRA-2020-027 eff. Oct. 1, 2020.
Amended by SR-FINRA-2020-022 eff. July 27, 2020.
Amended by SR-FINRA-2020-017 eff. June 10, 2020.
Amended by SR-FINRA-2020-015 eff. May 8, 2020.
Amended by SR-FINRA-2019-009 eff. May 8, 2019.
Amended by SR-FINRA-2008-008 eff. June 26, 2008.
Amended by SR-NASD-99-67 eff. Nov. 15, 2000.
Amended by SR-NASD-99-76 eff. Sept. 11, 2000.
Amended by SR-NASD-99-15 eff. Dec. 31, 1999.
Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
Amended by SR-NASD-97-28 eff. Aug. 7, 1997.
Adopted by SR-NASD-90-54 eff. Jan. 9, 1991.
Selected Notices: 00-56, 00-73.