Office of Hearing Officers

When the Financial Industry Regulatory Authority (FINRA) determines that a violation of the securities law or FINRA rules have occurred, which necessitates disciplinary action, a complaint may be filed with the FINRA Office of Hearing Officers. These complaints can result in significant regulatory sanctions against broker-dealers and stockbrokers found to have committed wrongdoing.

The Officer of Hearing Officers is made up of impartial adjudicators of disciplinary cases brought by either FINRA’s Enforcement Department or the Market Regulation Department against FINRA members. Some of the sources the Enforcement Department uses as a basis for when an investigation may be warranted include customer complaints, anonymous tips, and filings with FINRA Whistleblower office or securities arbitration department. The Office of Hearing Officers is completely independent of all of FINRA’s regulatory programs and does not participate in the investigative process.

After FINRA determines that a violation of securities rules has occurred, a complaint is filed with the Office of Hearing Officers. A three person panel is assigned to hear the case, with a Hearing Officer (who is also an employee of the Office of Hearing Officers), chairing the panel. The Chief Hearing Officer appoints two industry panelists. These panelists are selected from a large pool of people with various backgrounds. These include former securities industry members of FINRA’s District Committees and Market Regulation Committee, former members of FINRA’s National Adjudicatory Council, and former FINRA Governors.

Hearings are conducted throughout the United States, with the intent of providing the most convenience to the parties involved. The hearings are governed by FINRA’s Code of Procedure, which was approved by the Securities and Exchange Commission (SEC). During the hearing, the Hearing Officer will issue orders, conduct pre-hearing conferences, rule on motions and the admissibility of evidence, and issue any default decision or other orders appropriate under the Code of Procedure. After the panel deliberates, a hearing panel decision is drafted, which contains the factual findings, legal conclusions, and, if deemed appropriate, sanctions.

The Office of Hearing Officers has a wide variety of potential sanctions it can order, including:

1. Suspension or expulsion of a broker-dealer from membership in FINRA;
2. Suspension or bar of an individual from association with any FINRA member;
3. Fines;
4. Restitution;
5. Disgorgement of gains obtained through violations of securities rules;
6. Censures; and/or
7. Cease and desist orders.

Appeals of Office of Hearing Officers decisions are made to the National Adjudication Council, with appeals of that decision made to the SEC.

It is important to recognize that FINRA’s regulatory authority is separate from FINRA arbitration. FINRA rarely recovers investors’ losses through the regulatory process and investors are encouraged to seek their own counsel. Investors typically must pursue a securities arbitration claim in order to recover their money from a brokerage firm or stockbroker even if their advisor is the target of a regulatory charge.

The Office of Hearing Officers is just one way broker-dealers and the firms they work for are held accountable for the work they perform. FINRA also provides investors with protection through processes like arbitration and mediation. If you would like more information about the various ways you can recover for damage caused by broker misconduct, speak with an experienced securities law attorney today. At the Silver Law Group, we practice in all areas of securities law, with a specialized focus on FINRA arbitration claims.