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9524. National Adjudicatory Council Consideration

This version contains temporary amendments introduced with the filing of SR-FINRA-2020-015 (as extended by SR-FINRA-2020-017 and SR-FINRA-2020-022) and SR-FINRA-2020-027, which were both filed for Immediate Effectiveness.

The temporary amendments in SR-FINRA-2020-015 are effective from May 8, 2020, through a date to be specified in a public notice issued by FINRA, which date will be at least two weeks from the date of the notice, and no later than December 31, 2020, pending any future extensions. The temporary amendments in SR-FINRA-2020-027 become operative on September 30, 2020, and are in effect through December 31, 2020, pending any future extensions.
(a) Hearing Panel Consideration
(1) Appointment of Hearing Panel
When the disqualified member, sponsoring firm, or applicant requests a hearing, the National Adjudicatory Council or the Review Subcommittee shall appoint a Hearing Panel composed of two or more members, who shall be current or former members of the National Adjudicatory Council or the Statutory Disqualification Committee or former Directors or Governors. The Hearing Panel shall conduct a hearing and recommend a decision on the request for relief.
(2) Notice of Hearing
The disqualified member or sponsoring member, as the case may be, and the Department of Member Regulation shall be notified via mail, facsimile, or overnight courier of the location, time, and date of the hearing not less than fourteen business days before the hearing, unless the parties agree to shorten the time period.
(3) Transmission of Documents
(A) Upon receipt of an application, RAD shall gather all of the information necessary to process the application, including (i) RAD records for the disqualified member, sponsoring member, and/or disqualified person, as the case may be, and the proposed supervisor; and (ii) all of the information submitted by the disqualified member or sponsoring member in support of the application. RAD will prepare an index of these documents, and simultaneously provide this index and copies of the documents to the disqualified member or sponsoring member, as the case may be, the Office of the General Counsel, and the Department of Member Regulation. Such documents shall be served on the disqualified member or sponsoring member, as the case may be, by electronic mail, mail, facsimile, or overnight courier as soon as practicable. The Department of Member Regulation shall serve its recommendation and its supporting documents on the Office of General Counsel and the disqualified member or sponsoring member, as the case may be, within 10 business days of the hearing, unless the Parties agree otherwise. Such documents may be served by electronic mail. The disqualified member or sponsoring member, as the case may be, shall serve its documents on the Office of General Counsel and the Department of Member Regulation by electronic mail within 10 business days of the hearing, unless the Parties agree otherwise. The Office of General Counsel shall forward all documents transmitted to it pursuant to this paragraph (a)(3) to the Hearing Panel.
(B) Not less than 10 business days before the hearing, the Department of Member Regulation, which shall act as a Party in the eligibility proceeding, and the disqualified member or sponsoring member, as the case may be, shall serve proposed exhibit and witness lists on each other and the Office of General Counsel. FINRA shall serve its exhibit and witness lists by electronic mail, facsimile or overnight courier. The disqualified member or sponsoring member, as the case may be, shall serve its exhibit and witness lists by electronic mail, unless the Parties agree to an alternative method of service.
(C) At any time prior to the issuance of its recommendation, the Hearing Panel may order the Parties to supplement the record with any additional information that the Hearing Panel deems necessary.
(4) Rights of Disqualified Member, Sponsoring Member, Disqualified Person, and Department of Member Regulation
The disqualified member, sponsoring member, and/or disqualified person, as the case may be, and, the Department of Member Regulation, shall be entitled to be heard in person, to be represented by an attorney, and to submit any relevant evidence. Upon consideration of the current public health risks presented by an in-person hearing, the National Adjudicatory Council or Review Subcommittee may, on a temporary basis, determine that the hearing shall be conducted, in whole or in part, by video conference.
(5) Extensions of Time, Postponements, and Adjournments
At any time prior to the issuance of the decision of the Hearing Panel, after obtaining consent of all the Parties, the Hearing Panel may shorten any time limits prescribed by the Code for the filing of any papers and may postpone or adjourn any hearing. The Hearing Panel may extend any time limits prescribed by the Code for the filing of any papers.
(6) Recordation of Hearing
The hearing shall be recorded and a transcript prepared by a court reporter. The disqualified member, sponsoring member, and/or disqualified person, as the case may be, may purchase a copy of the transcript from the court reporter at prescribed rates. A witness may purchase a copy of the transcript of his or her own testimony from the court reporter at prescribed rates. Proposed corrections to the transcript may be submitted by affidavit to the Hearing Panel within a reasonable time determined by the Hearing Panel. Upon notice to the participants in the hearing, the Hearing Panel may order corrections to the transcript as requested or sua sponte.
(7) Record
The record shall consist of:
(A) the notice issued pursuant to Rule 9522(a), if applicable;
(B) all documents relied upon in issuing the notice under Rule 9522(a), if applicable;
(C) the application for relief filed pursuant to Rule 9522(b);
(D) any other submissions by the disqualified member, sponsoring member, and/or disqualified person, as the case may be, and the Department of Member Regulation;
(E) any evidence considered at the hearing; and
(F) the transcript of the hearing and any corrections thereto.
(8) Custodian of the Record
The custodian of the record shall be the Office of General Counsel of FINRA.
(9) Evidence Not Admitted
Evidence that is proffered but not admitted during the hearing shall not be part of the record, but shall be retained by the custodian of the record until the date when FINRA's decision becomes final or, if applicable, upon the conclusion of any review by the SEC or the federal courts.
(10) Recommendation
On the basis of the record, the Hearing Panel shall present a recommended decision in writing on the request for relief to the Statutory Disqualification Committee. After considering the record and recommendation of the Hearing Panel, the Statutory Disqualification Committee shall present its recommended decision in writing to the National Adjudicatory Council.
(b) Decision
(1) Decision of the National Adjudicatory Council
After considering all matters presented in the request for relief, the Statutory Disqualification Committee's recommended decision, the public interest, and the protection of investors, the National Adjudicatory Council may grant or deny the request for relief, and, if relief is granted, impose conditions on the disqualified member, sponsoring member, and/or disqualified person, as the case may be. At any time prior to the issuance of its recommendation, the National Adjudicatory Council may order the Parties to supplement the record with any additional information that the National Adjudicatory Council deems necessary. Alternatively, the National Adjudicatory Council may remand the eligibility proceeding. The National Adjudicatory Council shall prepare a proposed written decision pursuant to paragraph (b)(2).
(2) Contents of Decision
The decision shall include:
(A) a description of the origin of the eligibility proceeding and the nature of the disqualification;
(B) a description of the prospective business or employment requested to be engaged in; and
(C) a statement in support of the disposition of the request for relief, which, if granted, includes any of the applicable elements under SEA Rule 19h-1(e) and a description of any conditions that are imposed on the disqualified member, sponsoring member, or disqualified person, as the case may be.
(3) Issuance of Decision After Expiration of Call for Review Period
The National Adjudicatory Council shall provide its proposed written decision to the FINRA Board. The FINRA Board may call the eligibility proceeding for review pursuant to Rule 9525. If the FINRA Board does not call the eligibility proceeding for review, the proposed written decision of the National Adjudicatory Council shall become final, and the National Adjudicatory Council shall serve its written decision on the disqualified member, sponsoring member, and/or disqualified person, as the case may be, and the Department of Member Regulation pursuant to Rules 9132 and 9134, and may serve its written decision by electronic mail. The decision shall constitute final action of FINRA, unless the National Adjudicatory Council remands the eligibility proceeding. A decision to deny re-entry or continued association shall be effective immediately. A decision to approve shall be effective after the SEC issues an acknowledgment letter or, in cases involving SEC ordered sanctions, an order.
(c) Service by Electronic Mail; When Service is Complete
For purposes of Rule 9524, service by electronic mail shall be deemed complete upon sending the documents or decision.
Amended by SR-FINRA-2020-027 eff. Sept. 30, 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-2011-044 eff. Mar. 30, 2012.
Amended by SR-FINRA-2008-045 eff. June 15, 2009.
Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
Amended by SR-NASD-99-76 eff. Sept. 11, 2000.
Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

Selected Notices: 00-56, 08-57, 09-19, 12-12.

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