FINRA Rule 9342

Together these three provisions create a framework that balances the interests of appearing parties — who should not be penalized for another party's non-appearance — against the interests of the non-appearing party — who faces proportionate consequences for their failure without being denied all appellate recourse.

FINRA Rule 9342 sits within the 9340 Proceedings subsection of the 9300 Review of Disciplinary Proceeding series. It was adopted by SR-NASD-97-28 effective August 7, 1997, amended by SR-NASD-97-81 effective January 16, 1998, and last amended by SR-FINRA-2008-021 effective December 15, 2008. One selected notice is associated with the rule — 08-57.

The Predicate: Party Request Plus Due Notice

FINRA Rule 9342's failure-to-appear framework applies only when two conditions are satisfied. First, the non-appearing party must have requested oral argument — meaning they exercised the FINRA Rule 9341(a) right to request oral argument in their notice of appeal, cross-appeal, or within fifteen days of the NAC's notice of review. A party that never requested oral argument and simply did not appear at a session it did not request has not violated FINRA Rule 9342 because the predicate request condition is not met.

Second, the party must have been duly notified of the oral argument date, time, and location. The due notice requirement ensures that failure-to-appear consequences are imposed only when the party had actual or constructive notice of the proceeding. 

The notification is provided by Counsel to the NAC under FINRA Rule 9313(a)(4)'s scheduling authority, served on the parties through the email service mechanism authorized by the August 2022 amendment to FINRA Rule 9341. 

A party who did not receive due notice — because the notification was defective, sent to a stale address, or otherwise failed to reach them through no fault of their own — has not satisfied the due notice predicate and the waiver consequence does not apply.

The First Consequence: Waiver of Oral Argument Opportunity

The mandatory first consequence — the non-appearing party shall be deemed to have waived any opportunity for oral argument provided under the Rule 9300 series — is automatic upon the satisfaction of the two predicates. No Subcommittee order or discretionary determination is needed to effect the waiver — the waiver is self-executing.

The scope of the waiver is significant. It is not merely a waiver of the specific oral argument session the party missed — it is a waiver of any opportunity for oral argument under the entire Rule 9300 series. A respondent who requested oral argument in their notice of appeal, was duly notified, and failed to appear cannot subsequently claim a right to reschedule oral argument, cannot request a second opportunity at oral argument before a different Subcommittee session, and cannot seek oral argument at the full NAC level. The waiver is complete and forward-looking.

The finality of this waiver consequence creates a strong incentive for parties who have requested oral argument to appear — or to notify the Subcommittee promptly if circumstances beyond their control prevent appearance. While FINRA Rule 9342 does not provide an express mechanism for excusing non-appearance for good cause — unlike some administrative proceeding rules that permit rescheduling upon a good cause showing — the Subcommittee's general scheduling flexibility authority under FINRA Rule 9322 could potentially accommodate genuine emergencies if the party acts promptly to notify the Subcommittee before the scheduled session.

The Second Consequence: Argument Proceeds for Appearing Parties

The Subcommittee's mandatory obligation to permit argument to go forward as to parties who do appear is the fairness protection for those parties. When a respondent has requested and prepared for oral argument and the Department of Enforcement fails to appear — or vice versa — the appearing party's oral argument opportunity is not eliminated simply because the other side is absent. The Subcommittee shall permit the appearing party or parties to present their arguments, answer Subcommittee questions, and otherwise make their oral presentation even in the absence of the non-appearing party.

This proceeding-forward obligation has both practical and principled dimensions. Practically, a Subcommittee that has been convened for oral argument, prepared for it, and assembled its members for that purpose should not be required to reschedule and reconvene simply because one party did not appear — particularly given the scheduling complexity involved in assembling multiple Subcommittee members and parties' counsel. Principally, the appearing party has exercised their right to oral argument and should not be denied its benefits because another party chose not to participate.

The Third Consequence: Record-Based Consideration for Non-Appearing Parties

The Subcommittee's discretionary authority to consider the matter on the record without oral argument as to non-appearing parties is the consequence that shapes how the Subcommittee proceeds with respect to the non-appearing party's arguments after their waiver takes effect. The may formulation confirms that this is discretionary rather than mandatory — the Subcommittee assesses the specific circumstances and determines the most appropriate way to proceed with respect to the non-appearing party.

In practice, the discretionary record-based consideration means that the non-appearing party has not forfeited their written briefs, their record citations, or any other written submissions they made before the oral argument session. The Subcommittee considers those written materials when preparing its recommended decision — the non-appearing party loses the oral presentation opportunity and all its potential benefits, but does not lose the appellate record they built through the briefing process.

This consequence is calibrated and proportionate. FINRA Rule 9342 does not dismiss the non-appearing party's appeal or automatically rule against them on the merits — it simply removes the oral argument component from their appellate participation, leaving them in the same position as a party who chose to rely on written briefing alone under FINRA Rule 9343's disposition-without-oral-argument framework. The non-appearing party's appeal continues on the written record; they simply lose the opportunity to supplement it with live presentation.

FINRA Rule 9342 in the Context of Multi-Party Appeals

The most common factual scenario implicating FINRA Rule 9342 involves multi-party appeals where some parties appear and others do not. In a proceeding with a respondent and the Department of Enforcement both having requested oral argument, the non-appearance of either party triggers the three consequences of FINRA Rule 9342 as to the non-appearing party while argument proceeds as to the appearing party. The Subcommittee receives oral argument from one side, reviews written briefs from both sides, and prepares its recommended decision based on the full written record plus the appearing party's oral presentation.

This asymmetric oral argument scenario creates a practical disadvantage for the non-appearing party — the appearing party has the opportunity to address the Subcommittee's questions directly, emphasize the strongest aspects of their case, and respond to concerns the Subcommittee signals through its questioning, while the non-appearing party cannot. This dynamic reinforces the practical importance of appearing at scheduled oral argument when it has been requested and the Subcommittee has scheduled it.

Connection to FINRA Rules 9341, 9343, 9344, and 9345

FINRA Rule 9342 connects directly to FINRA Rule 9341 — the oral argument request and scheduling rule whose procedures must be satisfied before FINRA Rule 9342's failure-to-appear consequences become operative. It connects to FINRA Rule 9343 — the disposition without oral argument rule — because a non-appearing party's matter is effectively decided on the record alone pursuant to FINRA Rule 9342's third consequence, producing the same substantive outcome as a FINRA Rule 9343 disposition without oral argument. It connects to FINRA Rule 9344's abandonment provisions — a party who both fails to appear at oral argument and fails to file required briefs may be subject to FINRA Rule 9344's abandonment of appeal consequences rather than merely FINRA Rule 9342's narrower oral argument waiver. And it connects to FINRA Rule 9345 — because the Subcommittee's recommended decision must still address the non-appearing party's appeal on the merits of the written record even after their oral argument waiver.

Examination Relevance and Key Takeaways

FINRA Rule 9342 is tested on the Series 24 General Securities Principal examination in the context of the NAC appellate proceedings framework and the consequences of failing to participate in scheduled appellate proceedings.

The key points to retain are these: FINRA Rule 9342 applies when a party that requested oral argument fails to appear after being duly notified — both conditions must be satisfied; a party that never requested oral argument is not subject to FINRA Rule 9342 for non-appearance; a party without due notice is not subject to the waiver consequences; the first consequence is mandatory and automatic — the non-appearing party is deemed to have waived any opportunity for oral argument under the entire Rule 9300 series; the second consequence is also mandatory — the Subcommittee shall permit argument to proceed as to parties who do appear, protecting appearing parties from being denied their oral argument opportunity due to another party's non-appearance; the third consequence is discretionary — the Subcommittee may consider the non-appearing party's matter on the written record alone, producing effectively the same outcome as FINRA Rule 9343 disposition without oral argument but without dismissing the appeal or ruling against the non-appearing party on the merits; a non-appearing party retains their written briefs and record submissions — only the oral argument component of their appellate participation is forfeited; and the rule was adopted in 1997 and last amended December 15, 2008 through SR-FINRA-2008-021.