Table of Contents
SERIES 24 | FINANCIAL REGULATION COURSES
FINRA Rule 9520 is the series header for the Eligibility Proceedings subsection of the Code of Procedure — the cluster of rules governing the procedures through which persons subject to statutory disqualification may seek to become or remain associated with a FINRA member firm, and through which current members or associated persons may seek relief from FINRA's eligibility or qualification requirements. Its title — Eligibility Proceedings — announces the subject matter of the rules that follow: FINRA Rule 9521 establishing the purpose and definitions of the Rule 9520 series, FINRA Rule 9522 governing the initiation of eligibility proceedings and Department of Member Regulation consideration, FINRA Rule 9523 governing the sponsoring member's application and supervisory plan requirements, FINRA Rule 9524 governing the hearing procedures and decision framework, FINRA Rule 9525 governing the NAC review of eligibility decisions, FINRA Rule 9526 governing the contents and issuance of orders, and FINRA Rule 9527 governing the application to the SEC for review of eligibility decisions.
FINRA Rule 9520 itself has no independent operative text — it functions as the architectural series marker organizing the complete eligibility proceedings framework.
FINRA Rule 9520 sits within the 9000 Code of Procedure series as the organizational header for the seven-rule eligibility proceedings framework.
It was adopted as part of the Code of Procedure and has been significantly amended — most recently by SR-FINRA-2014-038 effective January 1, 2015 as announced in Regulatory Notice 14-55 — which comprehensively restructured the Rule 9520 series to establish new procedures applicable to firms and associated persons subject to certain statutory disqualifications.
The eligibility proceedings framework exists because FINRA's By-Laws — like Exchange Act Section 15(b)(4) — establish categories of persons who are subject to statutory disqualification and therefore presumptively ineligible to associate with FINRA member firms or to operate as FINRA members.
Statutory disqualification encompasses a broad range of past regulatory and legal events: felony convictions, certain misdemeanor convictions, bars or suspensions from other SROs, certain SEC orders, findings of violations in SEC proceedings, and other specified events.
A person with a statutory disqualification on their record is not automatically barred from the industry permanently — the Rule 9520 Series provides the mechanism through which such persons, with the support of a sponsoring member firm, may apply for FINRA's permission to associate with a member notwithstanding the disqualifying event.
FINRA Rule 9521 — Purpose and Definitions — establishes the purpose of the Rule 9520 series and defines terms specific to eligibility proceedings, including Application, Applicant, Department of Member Regulation, Eligibility Proceeding, and Sponsoring Member. The purpose statement confirms that the series addresses both association by disqualified persons and relief from eligibility or qualification requirements.
FINRA Rule 9522 — Initiation of Eligibility Proceeding; Member Regulation Consideration; and Requirements for an Interim Plan of Heightened Supervision — establishes how eligibility proceedings are initiated, the Department of Member Regulation's role in reviewing applications before formal hearing proceedings commence, the circumstances under which matters may be approved without formal hearings, and the interim heightened supervision plan requirements for disqualified persons seeking to associate during the pendency of their applications.
FINRA Rule 9523 — Acceptance of Sponsoring Member's Application and Supervisory Plan; Membership Proceedings — governs the application process for sponsoring member firms, the required contents of supervisory plans for disqualified persons, and the special procedures applicable when a firm seeking new membership or a change in ownership intends to associate with a disqualified person.
FINRA Rule 9524 — Hearing Procedures — governs the formal hearing procedures for eligibility proceedings before the Statutory Disqualification Committee, the parties' rights, the evidentiary framework, and the decision standards applicable to eligibility determinations.
FINRA Rule 9525 — National Adjudicatory Council Consideration; Decision — governs the NAC's review of Statutory Disqualification Committee decisions, the briefing process, and the NAC's formal decision framework for eligibility proceedings.
FINRA Rule 9526 — Contents and Issuance of Orders — governs the required contents of eligibility orders — whether granting or denying applications — and the service and dissemination obligations that attach to those orders.
FINRA Rule 9527 — Application to SEC for Review — governs the right of aggrieved parties to seek SEC review of final FINRA eligibility decisions, parallel to FINRA Rule 9370's disciplinary proceedings SEC review framework.
The most significant development in the Rule 9520 series' history is the comprehensive restructuring through SR-FINRA-2014-038 effective January 1, 2015, announced in Regulatory Notice 14-55. As confirmed from earlier research in this project, this amendment established new procedures applicable to firms and associated persons subject to certain statutory disqualifications — including new requirements for interim heightened supervision plans for disqualified persons, streamlined procedures for less serious disqualifications, and enhanced disclosure and supervisory plan requirements for more serious ones. The 2014 restructuring also clarified the role of the Department of Enforcement versus the Department of Member Regulation in eligibility proceedings and updated the Statutory Disqualification Committee's hearing procedures.
FINRA Rule 9520 is tested on the Series 24 General Securities Principal examination as the organizational header of the eligibility proceedings framework — understanding its structural role is prerequisite to navigating FINRA Rules 9521 through 9527 as the integrated framework governing statutory disqualification proceedings.
The key points to retain are these: FINRA Rule 9520 is the series header for the seven-rule eligibility proceedings framework governing procedures for disqualified persons to associate with FINRA members and for members and associated persons to obtain relief from eligibility requirements; it has no independent operative text but organizes FINRA Rules 9521 through 9527 as a unified framework; the series was comprehensively restructured by SR-FINRA-2014-038 effective January 1, 2015 as announced in Regulatory Notice 14-55; eligibility proceedings address the four categories of applicants — disqualified persons seeking to associate with a member, members seeking to employ disqualified persons, current members or associated persons seeking relief from eligibility requirements, and firms seeking new membership with disqualified persons; the series operates in parallel with FINRA Rule 9110's general Code of Procedure applicability framework; and proceedings under the Rule 9520 series are governed by the Rule 9100 General Provisions as the default framework unless a Rule 9520 series rule specifically provides otherwise.
