Disciplinary/Corrective Actions Relating to APs; Potential Violations of Securities Industry Laws, Rules and Regulations; Customer & Industry Disputes Flashcards
This form of dispute resolution is required for disputes between FINRA member firms
Arbitration
Simplified arbitration (one arbitrator) may be used for disputes in arbitration below this amount
$50k
How many arbitrators are used for cases with disputed amounts between $50k and $100k?
one arbitrator unless parties agree in writing to three (remember must be odd number)
How many arbitrators are used for cases with disputed amounts between>$100k?
three arbitrators unless parties agree in writing to one (remember must be odd number)
True / false: disputes between APs and BDs must be settled via arbitration in ALL instances?
False - must use arbitration for everything EXCEPT allegations of discrimination / harassment (which can be brought to court)
True / false: disputes between customers and BDs must be settled via arbitration?
false - arbitration with a customer can only take place if customer agreed in writing to arbitration pre-claim (which is often done via onboarding)
What is the statutes of limitation on submitting a claim for arbitration?
Six years
How long does a respondent have to answer an arbitration claim after notice?
45 days
How long does a panel have to render a decision, and if a monetary award is made how long does it have to be paid?
Panel will attempt to render a decision within 30 days of a complete record
All monetary damages have to be paid within 30 days of a decision
Can arbitration decisions be appealed?
no
What type of notice requirements are there in a FINRA arbitration expungement request?
1) state regulators must be notified of proceedings and are given 15 days to weigh in / participate
2) impacted customers must be notified and offered the opportunity to attend / participate in the hearing
Under the Code of Procedure, how much time does a respondent have to answer violation charges?
25 days (first notice) + additional 14 days (second notice) = 39 days
Then will be default judgement
What are some possible penalties under the Code of Procedure?
- Censure (written warning) = least severe
- Fine
- Suspension
- Bar / expulsion
- Cease and desist = most severe / urgent
What is the first appeal body after a decision is made by FINRA under Code of Procedure? How long does an appellant have to appeal?
National Adjudicatory Council (inside FINRA)
Within 25 days of verdict
After the National Adjudicatory Council, where is the next appeal body for a Code of Procedure verdict?
SEC
True / false: while a Code of Procedure verdict is appealed with the National Adjudicatory Council or the SEC can the rendered penalty be suspended
True
When do sanctions under the Code of Procedure come into effect?
Generally 30 days, EXCEPT a bar / expulsion / permanent cease and desist order which is in effect immediately
For violations of the Code of Procedure are defendants allowed to appeal past the SEC?
Yes, can appeal to federal appeals court and then SCOTUS HOWEVER the penalty is not suspended past appeal from SEC
A RR who is censured, pays a $2,500 fine and waives the right to appeal has committed a
minor rule violation
If a defendant is bared / suspended under the Code of Procedure, pending appeal what happens?
They are placed up a heightened supervision status pending th eoutcome of the appeal
FINRA may NOT discipline a rep by imposing…
1) jail
2) termination (only BD can terminate)
True / false: To be effective, customer complaints can be either written or oral
false - only written complaints are effective
How long does a broker dealer need to maintain complaints against RRs?
Non-muni complaints: four years (two years readily accessible)
Muni related complaints: six years (two readily accessible)
How quickly must a BD report customer complaints to FINRA?
if involving theft/fraud/misappropriation of funds then must be reported within 30 days
Otherwise must be submitted to FINRA within 15 days at end of each calendar quarter
True / false: a RR can handle customer complaints privately and don’t need to forward to a RP
False - cannot be handled “off the books”
True / false: any customer pre-dispute arbitration clause shall be highlighted so that customers understand the agreement
true
Under the Code of Arbitration, an arbitrator is compensated…
1) $300 if acting as an arbitrator;
2) an additional $125 if acting as a chairperson;
3) an additional $250 if as chairperson for a hearing on merits;
4) $50 for each arbitrator for travel to a postponed hearing
5) $600 for each arbitrator for a hearing (other than a prehearing conference) that is postponed WITHIN 10 days before scheduled date;
6) $100 for each arbitrator for a hearing cancelled / notified within 3 business days of a PREHEARING conference
