Before 2003, what could FINRA — then operating as the NASD — do about a member causing ongoing investor harm while a disciplinary proceeding ran?

Issue an interim order of its own on the same two-prong standard that the series now applies

Nothing of its own; it had to look to the SEC or a court for an injunction

Suspend the member's registration pending the outcome of the disciplinary proceeding

Apply to the Council for an expedited decision on the underlying complaint

How did FINRA's cease and desist authority move from being introduced to being a permanent part of the Code?

It ran as a pilot, was extended more than once, and was made permanent in 2009

It ran as a pilot until the SEC directed its adoption on a permanent basis in 2009

It was granted by statute in 2003 and required no rule filing to become permanent

It was permanent from adoption, the pilot being confined to the permanent order framework

How does the Rule 9800 series' intended timescale compare with that of the Rule 9200 disciplinary proceedings series?

The same, the difference lying in the remedy available rather than in the timetable

Days or weeks, against months or years for an ordinary disciplinary proceeding

Weeks or months, against years for an ordinary disciplinary proceeding to conclude

Longer, because the evidentiary burden on the Department of Enforcement is heavier

A respondent violates a cease and desist order that has already been issued against it. What does the Code provide for that?

Referral to the Commission, FINRA having no remedy for breach of its own order

Referral of the matter to the Hearing Panel that issued the order for contempt

An expedited enforcement proceeding under FINRA Rule 9556

A fresh cease and desist proceeding on the same two-prong standard

A permanent cease and desist order is not always issued by a Hearing Panel in a proceeding under the Rule 9800 series: it can also be imposed as part of a final disciplinary decision or accepted in a settlement. What follows for an order that arrives by one of those routes?

The Hearing Panel that decided the underlying disciplinary case must first make the two-prong showing the series requires before the order's terms take effect against the respondent.

Its content is whatever the final decision or the accepted settlement says, no prescribed requirements attaching to an order that did not come from a proceeding under the series.

Its terms must be submitted to the SEC for review and approval before it takes effect, unlike those of an order issued in a proceeding under the series.

Its content, scope and form must satisfy a separate permanent cease and desist framework, not the provisions the series applies to orders issued in a proceeding under it.

The Department of Enforcement believes a member firm is running an ongoing scheme that violates SEA Rule 10b-5. It wants a permanent cease and desist order from a proceeding brought under the Rule 9800 series for that purpose alone. What does the series offer it?

A temporary cease and desist proceeding for the alleged fraud, the permanent-order proceeding being confined to disruptive quoting under Rule 5210.03

A permanent cease and desist proceeding, since SEA Rule 10b-5 violations appear on the lists for both kinds of proceeding the series provides

A permanent cease and desist proceeding, provided a temporary order has first been obtained against the firm on the same conduct

Neither kind of proceeding, since fraud under SEA Rule 10b-5 must be pursued by the SEC rather than through FINRA's cease and desist rules

Enforcement alleges a FINRA Rule 2010 violation by a registered representative, based on his violations of Section 17(a) of the Securities Act. The conduct involved no unauthorized trading and no misuse or conversion of customer assets. Can that allegation ground a temporary cease and desist proceeding?

No, because the temporary list admits a FINRA Rule 2010 violation where it involves unauthorized trading or misuse or conversion of customer assets, and not otherwise

Yes, because a FINRA Rule 2010 violation based on violations of Section 17(a) is itself one of the branches on the temporary list

No, because a FINRA Rule 2010 violation qualifies for the temporary list only where the same conduct also violates SEA Rule 10b-5

Yes, provided the representative's member firm is also named as a co-respondent in the same notice that initiates the proceeding

Enforcement is preparing a notice to initiate a cease and desist proceeding. It wants an order that stops a representative trading in his customers' accounts and that makes him repay funds he transferred out of them. Beyond the provision he is alleged to have violated, what must the notice itself state about that relief?

That Enforcement asks him to refrain from trading, the repayment being a matter for the underlying complaint to seek

The dollar amount he must return, calculated account by account, and the date by which he must return it

That Enforcement asks for him to be required both to take action and to refrain from taking action

Nothing further, the relief sought being framed by the Hearing Panel once the hearing has closed

Enforcement uploads a notice initiating a temporary cease and desist proceeding to the OHO Portal and takes no other step to deliver it to the Respondent. Has the notice been served?

Yes; service through the OHO Portal is complete on submission, as it is for every paper filed or served in the proceeding

Yes, once the Respondent opens the notice in the Portal, service then being complete on the date it is first viewed

Yes, provided Enforcement also files a copy of the notice with the Office of Hearing Officers on the same day

Enforcement must serve a FINRA Rule 9211 complaint together with the notice initiating a temporary cease and desist proceeding. It wants to serve the complaint by email. May it?

Yes, with an additional copy by personal service or overnight courier, because the complaint may be served in the same way as the notice

No; a complaint sent other than by hand must go by first class certified mail or Express Mail, whatever kind of proceeding it accompanies

Yes, and the email alone completes service, because the notice it travels with has already been served on the Respondent in full

No; a complaint must be served on the Respondent by personal service, and never by an electronic means of any kind, whatever the notice used

Enforcement files a notice initiating a temporary cease and desist proceeding with the Office of Hearing Officers on a Monday. Service of the notice on the Respondent is not complete until the Tuesday. Absent any extension, the hearing must be held within fifteen days of which day?

The Monday, because the period runs from the filing of the notice with the Office of Hearing Officers

The Tuesday, because the period runs from service and filing and service was not complete until then

The day the Hearing Panel is appointed to preside over the proceeding, whenever that falls after service

The day the Respondent files an answer to the notice, which starts the hearing timetable running

At a temporary cease and desist hearing the Hearing Panel finds both parts of the two-part standard for a temporary order satisfied. The Respondent then promises the Panel that it will stop the conduct. What must the Panel do?

Decline the order if it accepts the promise, which removes the likely harm on which the standard rests

Adjourn the hearing to test whether the Respondent keeps its promise before deciding on the order

Impose the order, since the rule requires it once both findings are made

Impose the order only if Enforcement shows the promise is unreliable, the promise shifting the burden to it

On the second part of the temporary order standard, the Hearing Panel must find the conduct likely to cause significant asset dissipation or conversion, or other significant investor harm, within a certain period. What period?

Before the Respondent could be served with a complaint in the underlying disciplinary case

Before the hearing on the temporary order is held, the period the temporary proceeding exists to cover

Before the Hearing Panel in the underlying case issues its decision under the Rule 9200 Series

Before the underlying disciplinary proceeding is completed, including its stage under the Rule 9300 Series

After a temporary cease and desist hearing, the Hearing Panel concludes that Enforcement has not made the required showing and that no order should issue. What must the Panel produce?

A written decision stating that no order shall be imposed, issued within the same deadline as a decision granting one

Nothing in writing, because a written decision is required only where the Panel imposes an order on the Respondent

A written decision, but on the longer timetable that applies to a decision in an ordinary disciplinary proceeding

An oral ruling at the close of the hearing, recorded in the transcript and standing in place of a written decision

Enforcement served the notice that began a temporary cease and desist proceeding. The Hearing Panel has now issued its decision and a temporary order. Who serves them on the Respondent?

Enforcement, which serves the decision and the order by one of the methods it used for the initiating notice

The Office of Hearing Officers, which serves the decision and the order on Enforcement and the Respondent

The presiding Hearing Officer, who hands them to the parties in person at the close of the proceeding

The Respondent's counsel, who receives them from the Hearing Panel and passes them on to the Respondent

A Hearing Panel is drafting a temporary cease and desist order against a member firm found likely to be converting customer assets. Which of these could the order contain?

A fine sized to the customer assets converted so far, payable within thirty days of service

A censure recorded against the firm on its disciplinary history for the conduct alleged

A direction to cease and desist from converting customer assets and from the violation alleged

A suspension of the firm's membership until the underlying disciplinary proceeding is decided

A Respondent under a temporary cease and desist order never answers the complaint served with the notice, and a default decision is issued against her in the underlying disciplinary proceeding. What happens to the temporary order?

It converts into a permanent order on the same terms, the default being treated as an admission of the violation

It continues until the Hearing Panel that issued it reviews the default and lifts it on an application

It continues until the Respondent has exhausted any appeal she brings against the default decision

A member firm under a temporary cease and desist order files an application on a Monday asking for the order to be limited. On the Wednesday a Hearing Panel is appointed in the underlying disciplinary proceeding. Which Hearing Panel decides the application?

The Hearing Panel that presided over the temporary proceeding, no disciplinary Panel having been appointed at filing

The disciplinary proceeding's Hearing Panel, jurisdiction passing to it from the Wednesday on which it was appointed

Both Hearing Panels sitting jointly, since the application was still pending when the second Panel was appointed

The disciplinary proceeding's Hearing Panel, the application being treated as refiled with it once it is appointed

FINRA staff email a notice to a member firm's FINRA Contact System email address on the 3rd for failing to comply with a temporary cease and desist order, and send a copy by overnight courier on the 4th. The courier delivers it on the 5th. When is service of the notice complete?

On the 3rd, when the email was sent to the Contact System address

On the 4th, when the courier copy was sent

On the 5th, when the courier delivered the copy to the firm

On the 3rd, provided the firm reports no failed delivery of the email

A member firm served with a notice for failing to comply with its temporary cease and desist order files a request for a hearing with the Office of Hearing Officers eight days after service. Is the request timely?

No; a request must be filed within three business days of service of the notice

Yes; a request is timely if filed within twenty-five days of service, the period for an appeal

Yes; a request is timely at any point until a Hearing Officer has imposed the suspension

No; a request must be filed before the notice's effective date, which is seven days after service

A member firm served with a notice naming a suspension for failing to comply with a cease and desist order requests a hearing. Is the firm guaranteed that the hearing cannot leave it facing more than the suspension the notice names?

No; the Hearing Officer or Hearing Panel may approve, modify or withdraw the notice's sanctions and may impose any other fitting sanction

Yes; the hearing may approve, reduce or withdraw the suspension the notice names but has no power to add any sanction to it

Yes; any heavier sanction would need a fresh notice served on the firm with its own compliance period before it could apply

No; a firm that requests a hearing has its suspension converted into a cancellation of membership if the notice is upheld

A member firm already served with a notice for failing to comply with a cease and desist order fails to comply with the same order again, and the department petitions the Office of Hearing Officers for a hearing. The department then withdraws the petition. What can it do afterwards?

Refile on the same facts only with the member firm's written consent to the renewed proceeding

Refile a petition later based on allegations concerning the same facts and circumstances

Nothing on those facts, a withdrawn petition operating as a dismissal of the allegations it made

Proceed on the same facts only by serving a fresh notice with a new period for compliance

The Department of Enforcement initiates a standalone permanent cease and desist proceeding under the Rule 9800 series, not a temporary one. Must it serve and file a FINRA Rule 9211 complaint together with the initiating notice?

Yes; every notice initiating a cease and desist proceeding must be served and filed together with such a complaint

Yes, unless a complaint on the same subject matter has already been issued against the Respondent

No; the rule requiring a complaint with the notice is written for temporary proceedings

No; a complaint is instead filed within ten days after the permanent order has been issued

A registered representative moved customer funds into an account she controls. Her last transfer was a week before Enforcement served its notice initiating a temporary cease and desist proceeding, and she has made none since. She argues that the Hearing Panel cannot find the conduct likely to cause significant asset dissipation or conversion, or other significant investor harm, because the conduct has stopped. Is she right?

No; the rule looks at the alleged violative conduct as well as its continuation, so the transfers already made can support that finding

Yes; the finding looks forward to further violations, and a Respondent who has already stopped leaves no ongoing conduct for an order to restrain

No, but only because a week is too short a gap; a longer period without any transfers at all would itself be enough to defeat the finding

Yes, unless Enforcement shows she is likely to resume the transfers, since the finding turns on the prospect of further conduct of the same kind

With the required written authorization, FINRA staff serve a notice by email on a registered representative for failing to comply with a temporary cease and desist order directed at him alone. He is associated with two member firms. Where must the emailed notice be sent?

The email address listed in the FINRA Contact System by the firm through which he did the business the order concerns

His own last known email address, rather than an address either of his firms has listed in the FINRA Contact System

The email addresses both of his firms list in the FINRA Contact System, so that the notice reaches him through each

His residential address in the Central Registration Depository by post, a notice to an individual not being served by email

A member firm already served with a notice for failing to comply with a cease and desist order fails to comply again, and FINRA staff petition the Office of Hearing Officers for a hearing on the repeat failure. The petition identifies the provision of the order alleged to have been violated, contains a statement of facts specifying the violation, and notes that a FINRA Rule 9559 hearing is requested. What, if anything, that the rule requires of such a petition does it lack?

A copy of the earlier notice and proof of its service, which the petition must attach when it is filed

A statement of what the firm must do to avoid the sanctions, and the time within which it must do it

Nothing; naming the provision, stating the facts and requesting a hearing are all the rule requires of it

A description of the sanctions FINRA staff seek to have imposed on the firm

A temporary cease and desist order is directed at Mr. Vance, a registered representative, and at nobody else. Some months later he forms a member firm of his own and moves his customers' accounts to it. Does the order bind the new firm as Mr. Vance's successor?

Yes — every temporary order reaches the Respondent's successors, and a firm formed to take over the customers' accounts he serviced is plainly one of them

Yes, but only once Enforcement serves the new firm with a fresh notice naming it as the successor of the Respondent that the order was directed at

No — an order reaches a successor only where the Respondent is a member firm, so this order goes on directing Mr. Vance himself

No — the order lapses altogether once its Respondent leaves the member firms with which he was associated on the day that the order was issued

FINRA Rule 9800 | Financial Regulation Courses

Temporary and Permanent Cease and Desist Orders

SERIES 7 | SERIES 24 | FINANCIAL REGULATION COURSES

FINRA Rule 9800 is the series-level marker for the Temporary and Permanent Cease and Desist Orders division of the 9000 Code of Procedure — the organizational designation grouping the seven substantive rules that define the complete framework through which FINRA seeks, obtains, modifies, and enforces its most powerful interim and permanent enforcement remedies, and through which those remedies may ultimately be reviewed by the SEC.

Its title — Temporary and Permanent Cease and Desist Orders — identifies the two distinct but related instruments at the heart of the series: the temporary cease and desist order, which is an immediate interim remedy imposed pending resolution of underlying disciplinary proceedings, and the permanent cease and desist order, which is a lasting directive imposed either by a Hearing Panel in a PCDO Proceeding under the series or as part of a final disciplinary sanction.

FINRA Rule 9800 has no operative text. Its FINRA.org page returns no rule text under The Rule tab and shows only the table of contents for its seven child rules. The series was adopted through SR-NASD-98-80 effective June 23, 2003 — the rulemaking that introduced FINRA's cease and desist authority on an initial pilot basis as announced in Notice to Members 03-35 — and has been amended seven times since, most recently through SR-FINRA-2016-043 effective December 15, 2016. Three selected notices are associated with the series — 03-35, 04-36, and 08-57.

FINRA Rule 9800 sits within the 9000 Code of Procedure positioned between the Rule 9700 Procedures on Grievances Concerning the Automated Systems series and the Rule 9900 Restrictions on Former FINRA Officers and Employees series.

The Rule 9800 series represents one of FINRA's most significant regulatory powers — the ability to act urgently and decisively against ongoing misconduct before the full disciplinary proceeding is complete — and the seven rules within it define every procedural dimension of how that power is exercised, challenged, reviewed, and enforced.

The Development of FINRA's Cease and Desist Authority

The Rule 9800 series' history traces FINRA's gradual acquisition, expansion, and formalization of cease and desist authority over more than two decades. Before 2003, FINRA — then operating as the NASD — had no authority to issue temporary or permanent cease and desist orders. If FINRA's enforcement staff identified a member or associated person engaged in ongoing fraud or investor harm, they could file a disciplinary complaint under the Rule 9200 series, but that complaint would not stop the conduct during the potentially years-long disciplinary proceeding that followed. FINRA could seek emergency relief from the SEC or initiate parallel action to have the SEC or a court issue an injunction — but FINRA itself had no self-executing interim remedy authority.

The gap between FINRA's identification of ongoing misconduct and its ability to stop it created real investor harm. Studies of securities fraud cases identified numerous instances where investors continued to suffer losses during disciplinary proceeding pendency because FINRA could not act quickly enough through the standard Rule 9200 series framework. SR-NASD-98-80 addressed this gap by introducing cease and desist authority on an initial pilot basis, with FINRA committing to evaluate the pilot's effectiveness before seeking permanent adoption.

SR-NASD-2003-110, effective June 28, 2004, made various amendments to the pilot framework. SR-NASD-2005-061, effective May 11, 2005, and SR-NASD-2007-033, effective June 23, 2007, provided extensions and further modifications. SR-FINRA-2009-034, effective June 23, 2009, and SR-FINRA-2009-035, effective July 14, 2009, made the cease and desist authority permanent — converting the pilot framework into a permanent component of FINRA's regulatory toolkit announced in Regulatory Notice 08-57. SR-FINRA-2016-043, effective December 15, 2016, made the most recent amendment to the series marker itself, confirmed from the Versions tab on FINRA Rule 9800's page, which shows the current version as operative from December 15, 2016; several rules within the series have been amended since.

The Seven Rules Within FINRA Rule 9800's Series

FINRA Rule 9810 — Initiation of Proceeding — governs how a cease and desist proceeding is initiated by the Department of Enforcement, the violations on which a TCDO Proceeding or a PCDO Proceeding may be based, and the notice and complaint requirements for the TCDO application; the two-prong standard FINRA must satisfy to obtain a TCDO — showing a likelihood of success on the merits of an underlying violation and that the conduct or its continuation is likely to result in significant dissipation or conversion of assets or other significant harm to investors before completion of the disciplinary proceeding — is applied by the Hearing Panel under FINRA Rule 9840.

FINRA Rule 9820 — Appointment of Hearing Officer and Hearing Panel — governs the Chief Hearing Officer's appointment of a Hearing Officer and a specialized Hearing Panel to preside over the cease and desist proceeding with defined membership qualifications reflecting the specialized nature of TCDO hearings.

FINRA Rule 9830 — Hearing — governs the expedited hearing process for TCDO applications including the compressed pre-hearing notice requirements, the evidentiary standards applicable to TCDO proceedings, and the urgency-calibrated procedural rules that distinguish TCDO hearings from standard disciplinary proceedings.

FINRA Rule 9840 — Issuance of Order by Hearing Panel — governs the Hearing Panel's written decision whether to issue a temporary or permanent cease and desist order; the standard for issuance of each; the scope and content of any order issued; the duration of the TCDO pending resolution of the underlying disciplinary proceeding; and the service and effectiveness of the order, while the TCDO's relationship to the underlying complaint is completed by FINRA Rule 9290's expedited disciplinary proceeding requirement.

FINRA Rule 9850 — Review by Hearing Panel — governs a Party's right to apply to the Hearing Panel to have an issued temporary or permanent cease and desist order modified, set aside, limited, or suspended, and the Hearing Panel's authority on that application.

FINRA Rule 9860 — Violation of Cease and Desist Orders — governs the consequences when a respondent violates a TCDO or PCDO that has been issued, including the expedited enforcement pathway through FINRA Rule 9556 and any additional sanctions that may be imposed for the violation.

FINRA Rule 9870 — Application to SEC for Review — governs the respondent's right to seek SEC review of a final FINRA action in a cease and desist proceeding, parallel to the SEC review rights under FINRA Rule 9370 for disciplinary proceedings and FINRA Rule 9770 for automated systems grievances.

The Rule 9800 Series in FINRA's Enforcement Architecture

The Rule 9800 series occupies a distinctive and powerful position in FINRA's complete enforcement architecture. Unlike the Rule 9200 disciplinary proceedings series — which operates on a timeline measured in months or years from complaint through final decision — the Rule 9800 series is designed to operate in days or weeks.

The proceeding must be initiated under FINRA Rule 9810, the Hearing Panel appointed under FINRA Rule 9820, the hearing conducted under FINRA Rule 9830, and the TCDO issued or denied under FINRA Rule 9840 on the two-prong likelihood-of-success and investor-harm standard, within a compressed timeframe calibrated to the urgency of stopping ongoing misconduct before more investors are harmed.

The Rule 9800 series also connects directly to other series throughout the Code. A TCDO proceeding initiated under FINRA Rule 9810, and any TCDO issued under FINRA Rule 9840, triggers the mandatory expedited disciplinary proceeding requirement of FINRA Rule 9290 — ensuring that the underlying disciplinary proceeding proceeds at the earliest possible time so that the TCDO's duration is limited to what is genuinely necessary. A TCDO or PCDO violation may be pursued, with the written authorization of FINRA's Chief Executive Officer or a designated senior officer, through FINRA Rule 9556's expedited enforcement proceeding. And a PCDO issued as part of a final disciplinary decision under FINRA Rule 9268 or accepted in settlement under FINRA Rule 9270 must satisfy FINRA Rule 9291's content, scope, and form requirements — the permanent cease and desist framework adopted in 2015, after the Rule 9800 series' permanent adoption in 2009.

The 2016 Amendment: The Most Recent Version

The most recent amendment to FINRA Rule 9800 — SR-FINRA-2016-043 effective December 15, 2016 — is confirmed from the Versions tab on the FINRA Rule 9800 page showing the current version as operative from that date. The specific substantive changes made by this amendment affected provisions within the individual rules of the series — the Versions history of each shows SR-FINRA-2016-043 among the amendments to every rule from FINRA Rule 9810 to FINRA Rule 9870. The December 2016 amendment date is the most recent change to the series marker and to multiple rules within it.

Transparency note: The FINRA Rule 9800 page confirms the December 15, 2016 amendment as the most recent change to the series. I will fetch each of FINRA Rules 9810 through 9870 individually before writing each entry to confirm whether any of those rules have been amended more recently than the series marker's last amendment date — it is possible that individual rules within the series have been amended after December 2016 through filings that modified specific rules without updating the series marker. I will flag any such discrepancies when I find them.

Two Proceedings, Two Lists of Violations

FINRA Rule 9810(a) lets the Department of Enforcement bring two kinds of proceeding, each tied to its own list of alleged violations. A TCDO Proceeding may be brought for alleged violations of Section 10(b) of the Exchange Act and SEA Rule 10b-5; SEA Rules 15g-1 through 15g-9; FINRA Rule 2010, but only where the alleged violation is unauthorized trading, misuse or conversion of customer assets, or is based on violations of Section 17(a) of the Securities Act; FINRA Rule 2020; or FINRA Rule 4330, but only where the alleged violation is misuse or conversion of customer assets. A PCDO Proceeding may be brought only for alleged violations of Supplementary Material .03 to FINRA Rule 5210, which prohibits disruptive quoting and trading activity.

The FINRA Rule 2010 limb has three branches, not two. Suppose Enforcement alleges that a registered representative, Mr. Vance, violated FINRA Rule 2010 through conduct that also violated Section 17(a) of the Securities Act. That alleged violation is on the TCDO list, although it is neither unauthorized trading nor misuse or conversion of customer assets.

The two lists do not overlap. Suppose Enforcement believes a member firm, Northgate Securities, is running an ongoing scheme that violates SEA Rule 10b-5, and it wants a permanent order from a proceeding brought for that purpose alone. The series does not offer that: a PCDO Proceeding reaches only Supplementary Material .03 to FINRA Rule 5210. What the series offers for the alleged fraud is a TCDO Proceeding, because SEA Rule 10b-5 is on the temporary list.

What the Initiating Notice Must Say and How It Is Served

The notice that begins either kind of proceeding must set out the rule or statutory provision the Respondent is alleged to have violated and that Enforcement is asking to have the Respondent ordered to cease violating. It must also say whether Enforcement is asking for the Respondent to be required to take action, to refrain from taking action, or both. A notice that asks for an order stopping Mr. Vance from placing trades in customer accounts, and also requiring him to return money he moved out of them, asks for both, and must say so.

Enforcement serves the notice itself. FINRA Rule 9810(a) lists four methods: personal service, overnight commercial courier, facsimile, or email. The OHO Portal is not among them. The Portal is the ordinary route for papers the Office of Hearing Officers serves later in the proceeding, but uploading the initiating notice to the Portal does not serve it under FINRA Rule 9810(a).

The Complaint That Travels With a Temporary Proceeding

Where Enforcement has not already issued a complaint under FINRA Rule 9211 against the Respondent on the subject matter of a TCDO Proceeding, alleging violations of the provision specified in the notice, it must serve and file such a complaint with the notice. That complaint may be served in the same way as the notice. A complaint served in the ordinary way and sent by mail must go by U.S. Postal Service first class certified mail or Express Mail. A complaint that accompanies a TCDO notice may instead be emailed to the Respondent, with an additional copy sent by personal service or overnight commercial courier, because FINRA Rule 9810(d) lets its service follow paragraph (a).

The complaint requirement is written for TCDO Proceedings. Paragraph (d) is headed "Filing of Underlying Complaint for Temporary Cease and Desist Orders" and speaks only of the notice initiating a TCDO Proceeding. A PCDO Proceeding for disruptive quoting is initiated by the notice and its accompanying papers, and FINRA Rule 9810(d) does not attach a complaint to it.

Worked Scenario: Counting the Hearing Timetable

On a Monday, Enforcement emails a TCDO notice to Ms. Reyes and files a copy with the Office of Hearing Officers. On the Tuesday it sends the additional copy by overnight commercial courier, and the courier delivers it on the Wednesday. Service by email would ordinarily be complete on sending, but because a duplicate is required, service is complete when the duplicate service is complete. Service by overnight courier is complete on sending, so service is complete on the Tuesday, and the notice takes effect then.

The hearing must be held not later than 15 days after service of the notice and filing initiating the proceeding, unless the Chief Hearing Officer or Deputy Chief Hearing Officer extends that for good cause shown. In Ms. Reyes's case the notice was filed on the Monday but its service was not complete until the Tuesday, so the fifteen days run from the Tuesday.

Suppose one of the two Panelists is disqualified and a replacement is appointed on the thirteenth day after service. The hearing must then be held not later than five days after the replacement is appointed, which is the eighteenth day.

The hearing is recorded by a court reporter and a written transcript is prepared. The Hearing Panel's decision deadline runs from the transcript, not from the hearing. If the hearing ends on the 18th of the month and the Hearing Panel receives the transcript on the 21st, its written decision is due not later than the 31st.

What the Hearing Panel Must Find, and When It Must Decide

A temporary cease and desist order shall be imposed if the Hearing Panel finds both that Enforcement has made a showing of a likelihood of success on the merits and that the alleged violative conduct or its continuation is likely to result in significant dissipation or conversion of assets or other significant harm to investors before the underlying disciplinary proceeding is completed. Where the Panel makes both findings, the rule does not leave it a choice: the order shall be imposed. A Panel that has made both findings cannot decline the order because the Respondent has promised to stop.

The harm the Panel must find likely is harm before the completion of the underlying disciplinary proceeding under the Rule 9200 and 9300 Series. The period runs to the end of the disciplinary proceeding under both series, so it includes the stage governed by the Rule 9300 Series, not only the hearing stage under the Rule 9200 Series.

The ten-day decision deadline can be extended, but not by the Hearing Panel itself. Only the Chief Hearing Officer or Deputy Chief Hearing Officer may extend it, for good cause shown. A Hearing Panel that needs more time must obtain the extension from one of them.

Serving the Decision and the Order

The Hearing Panel issues a written decision stating whether a temporary cease and desist order shall be imposed. It must do so whichever way it decides, so a decision refusing the order is also a written decision issued within the same deadline. The Office of Hearing Officers serves the Hearing Panel's decision, and any order, on Enforcement and the Respondent.

The two ends of the proceeding are served by different hands. Enforcement serves the notice that starts it, by one of the methods listed in FINRA Rule 9810(a). The Office of Hearing Officers serves the order the Hearing Panel issues in it, under FINRA Rule 9134(c), and service through the OHO Portal is complete on submission.

An order is effective when service is complete, unless the order itself specifies otherwise. Suppose a temporary order served through the OHO Portal at 2 p.m. on a Wednesday states that it takes effect at 9 a.m. on the Thursday. It binds the Respondent from 9 a.m. on the Thursday, the time the order specifies.

Who Receives a Copy, and What a Temporary Order Can Order

The Office of Hearing Officers provides a copy of the order to each FINRA member with which the Respondent is associated. Suppose Mr. Vance is associated with two member firms and the order is directed at him alone. Each firm receives a copy from the Office of Hearing Officers. The one-business-day duty to deliver copies to associated persons falls on a Respondent that is a member firm, so it does not arise where the only Respondent is Mr. Vance.

A temporary order is limited to ordering the Respondent to cease and desist from violating a specific rule or statutory provision and, where applicable, from dissipating or converting assets or causing other harm to investors. It describes the acts the Respondent must take, refrain from taking, or both. Because the order is limited to those directions, a fine is not among the things a temporary order can contain. The temporary order remains in force until the underlying proceeding is decided or settled.

The Temporary Order and the Underlying Case

A temporary order lasts until the underlying case is resolved. It remains effective and enforceable until a decision is issued under FINRA Rule 9268 or FINRA Rule 9269, or until a settlement offer is accepted under FINRA Rule 9270. Suppose Ms. Reyes never answers the complaint that was served with the TCDO notice, and a default decision is issued against her under FINRA Rule 9269. The temporary order ends when that decision is issued, as it would on a decision after a contested hearing.

The underlying disciplinary proceeding is expedited from the moment the temporary proceeding is initiated. FINRA Rule 9290 applies to any disciplinary proceeding whose subject matter is also subject to a temporary cease and desist proceeding initiated under FINRA Rule 9810, or to a temporary cease and desist order. It therefore applies as soon as the TCDO notice is served, before the Hearing Panel has decided whether to issue an order.

FINRA Rule 9290 does not fix a number of days. The expedited schedule for the disciplinary proceeding is set at a pre-hearing conference held under FINRA Rule 9241.

Review by the Hearing Panel While the Case Runs

Which Hearing Panel decides an application to modify, set aside, limit or suspend a temporary order depends on the state of the underlying case on the day the application is filed. Suppose Northgate files its application on a Monday, and the Hearing Panel in the underlying disciplinary proceeding is appointed on the Wednesday. At filing no disciplinary Hearing Panel had been appointed, so the Hearing Panel that presided over the TCDO Proceeding keeps jurisdiction over that application.

Violation of an Order: FINRA Rule 9860

FINRA Rule 9860 sets out what a Respondent who violates a temporary or permanent cease and desist order issued under the series faces. A member firm may have its membership suspended or canceled, and an associated person may have their association suspended or canceled. Either may instead be subject to any fitting sanction under FINRA Rule 9556. FINRA's Chief Executive Officer, or another senior officer the Chief Executive Officer designates, must authorize the start of any such proceeding in writing.

The notice FINRA staff issue under FINRA Rule 9556 must explicitly identify the provision of the order the Respondent is alleged to have violated, and must contain a statement of facts specifying the alleged violation. A notice that says only that Northgate "has failed to comply with its temporary cease and desist order", without naming which provision and what Northgate did, does not meet that requirement.

A member's fax number and email address for these notices are the ones in the FINRA Contact System. If staff actually know that a member's FINRA Contact System fax number is out of date, faxing the notice there is not enough. Duplicate copies must go to the member by overnight courier or personal delivery.

Worked Scenario: The Seven-Day Notice Under FINRA Rule 9556

Northgate is under a temporary order. With the required written authorization, FINRA staff email a notice to Northgate's email address in the FINRA Contact System on the 3rd. They send a copy by overnight courier on the 4th. For a member served by email, FINRA Rule 9556(b) requires the notice also to be served by overnight courier or personal delivery. Where duplicate service is required, service is complete when the duplicate is sent, so service here is complete on the 4th, not the 3rd.

The notice tells Northgate that if it fails to comply with the order within seven days of service, its membership will be suspended or canceled. It must also explain what Northgate must do to avoid that. If Northgate comes into compliance with the order within the seven days, the stated consequence does not follow, because the notice ties the suspension or cancellation to a failure to comply within that period.

If Northgate wants a hearing, its request must be filed with the Office of Hearing Officers before the effective date, which is seven days after service. A request filed after that date is not timely. If Northgate neither complies nor requests a hearing in time, the suspension or cancellation takes effect seven days after service, and the notice constitutes final FINRA action.

After a Suspension, and on a Repeat Failure

A suspension imposed through this process need not last indefinitely. A member or person subject to it may file a written request for termination of the suspension on the ground of full compliance with the notice or decision. The request goes to the head of the FINRA department or office that issued the notice (or of the department or office designated to handle the matter for it), who may grant relief for good cause shown. It does not go to the Hearing Panel that issued the cease and desist order.

The notice also has to say what can happen at a hearing. Under FINRA Rules 8310(a) and 9559(n), a Hearing Officer or, if applicable, Hearing Panel may approve, modify or withdraw any and all sanctions or limitations the notice imposes, and may impose any other fitting sanction. A member that requests a hearing is therefore not guaranteed to face at most the suspension named in the notice.

A member already served with a notice for failing to comply with any provision of an order may fail to comply with the same order again. Staff may then petition the Office of Hearing Officers for a hearing under FINRA Rule 9559 and for any fitting sanction. The department that filed a petition may withdraw it without prejudice, and it may later refile a petition based on allegations about the same facts and circumstances.

Which Temporary Predicates Carry a Condition

Not every entry on the temporary list in FINRA Rule 9810(a)(1) is qualified. The FINRA Rule 2010 entry applies only where the alleged violation is unauthorized trading, misuse or conversion of customer assets, or based on violations of Section 17(a) of the Securities Act. The FINRA Rule 4330 entry applies only where the alleged violation is misuse or conversion of customer assets. The entries for Section 10(b) of the Exchange Act and SEA Rule 10b-5, for SEA Rules 15g-1 through 15g-9, and for FINRA Rule 2020 carry no condition of that kind.

Suppose Enforcement alleges that Northgate violated FINRA Rule 2020, and the conduct alleged involves no customer assets and no unauthorized trading. That allegation can still be the basis of a TCDO Proceeding, because the FINRA Rule 2020 entry is not limited to particular conduct. An allegation that Northgate violated FINRA Rule 4330 on the same facts could not be, because that entry reaches only misuse or conversion of customer assets. Being on the list does not itself produce an order: in a TCDO Proceeding the Hearing Panel imposes a temporary order if it makes both findings FINRA Rule 9840(a) requires.

Conduct That Has Already Stopped

The second finding for a temporary order looks at the conduct as well as at its continuation. FINRA Rule 9840(a)(2) asks whether "the alleged violative conduct or continuation thereof" is likely to result in significant dissipation or conversion of assets or other significant harm to investors before the underlying disciplinary proceeding is completed. The finding can rest on the alleged violative conduct itself, and not only on the prospect that it will go on.

Suppose Ms. Reyes moved customer funds into an account she controls and made her last transfer a week before Enforcement served its TCDO notice. That she has stopped making transfers does not by itself defeat the second finding. If the evidence shows that the transfers already made are likely to result in significant dissipation or conversion of assets before the underlying disciplinary proceeding is completed, the Hearing Panel can make the finding, because the rule names the alleged violative conduct as well as its continuation.

When the Respondent Is an Individual

FINRA Rule 9556(a)(1) lists the consequences a notice may warn of: a suspension or cancellation of membership, or a suspension or bar from associating with any member. A member has a membership to lose. An individual does not, so for a person associated with a member the consequences in point are a suspension or a bar from associating with any member. Suppose Mr. Vance, who is associated with two member firms, fails to comply with a temporary order directed at him. With the required written authorization, FINRA staff may issue him a notice stating that his failure to comply with the order within seven days of service of the notice will result in a suspension or a bar from associating with any member. That reaches his association with both firms, not only with the firm through which he did the business the order concerns.

The notice to Mr. Vance is addressed to him personally. FINRA Rule 9556(b) sends papers served on a member by email to the member's email address listed in the FINRA Contact System. Papers served on a person by facsimile or email go to the person's last known facsimile number or email address, and must also be served by overnight courier or personal delivery. So a notice emailed to Mr. Vance goes to his last known email address, not to the email address either firm has listed in the FINRA Contact System, and the notice must also be served on him by overnight courier or personal delivery. Separately, a copy of a notice served on a person associated with a member must also be served on that member.

The order itself has a term that only a member firm Respondent attracts. A temporary order is directed at the Respondent "and any successor of a Respondent, where the Respondent is a member firm". Where the only Respondent is Mr. Vance, the order carries no successor term. If he later forms a firm of his own and moves his customers' accounts to it, the order does not bind that firm as his successor; it continues to direct Mr. Vance.

Faxing a FINRA Rule 9556 Notice to a Member

FINRA Rule 9556(b) treats a member's fax differently from a member's email. Papers served on a member by facsimile are sent to the member's facsimile number listed in the FINRA Contact System. The rule requires duplicate copies by overnight courier or personal delivery where FINRA staff have actual knowledge that this number is out of date. Papers served on a member by email, by contrast, must in every case also be served by overnight courier or personal delivery. Service is complete upon sending the notice by facsimile or email, except that where duplicate service is required, service is complete upon sending the duplicate.

Suppose FINRA staff fax a notice to Northgate's facsimile number in the FINRA Contact System on the 3rd. They have no knowledge that the number is out of date, and they send nothing else. No duplicate service is required, so service is complete on the 3rd, upon sending the fax.

Requests Under FINRA Rule 9556: Their Form and Where They Go

A member served with a FINRA Rule 9556 notice may file with the Office of Hearing Officers a written request for a hearing under FINRA Rule 9559. Suppose Northgate's chief compliance officer telephones the Office of Hearing Officers before the notice's effective date and says that Northgate wants a hearing, but nothing is filed in writing. That call is not the written request FINRA Rule 9556(e) provides for.

A request to end a suspension goes to a department head. It is filed with the head of the FINRA department or office that issued the notice. If another FINRA department or office is named as the party handling the matter on behalf of the issuing department or office, it is filed with the head of the department or office so designated. Suppose a notice was issued by one FINRA department and names a second department as the party handling the matter on its behalf. A suspended member that has fully complied files its request for termination of the suspension with the head of the second department.

What a Repeat-Failure Petition Must Contain

A petition under FINRA Rule 9556(h) shares two required contents with the first notice and adds two of its own. Like the notice, it must explicitly identify the provision of the temporary or permanent cease and desist order alleged to have been violated and contain a statement of facts specifying the alleged violation. It must also describe with particularity the sanctions FINRA staff seek to have imposed, and note that a hearing under FINRA Rule 9559 is requested. It is served in accordance with FINRA Rule 9556(b) and filed with the Office of Hearing Officers. A petition that names the provision, sets out the facts and asks for a hearing, but does not say what sanctions staff seek, does not meet FINRA Rule 9556(h)(2).

The petition depends on an earlier notice under the same order. FINRA Rule 9556(h) applies where the member or person has previously been served under paragraph (a) with a notice for a failure to comply with any provision of the same temporary or permanent cease and desist order. Suppose Northgate was served last year with a notice for failing to comply with one cease and desist order, and now fails to comply with a different order issued in a separate proceeding. The earlier notice concerned a different order, so it does not satisfy that condition. For the new failure, FINRA Rule 9556 provides instead for a notice under paragraph (a)(1).

Examination Relevance and Key Takeaways

FINRA Rule 9800 is tested on the Series 7 and Series 24 examinations as the series-level marker for FINRA's cease and desist orders framework — one of FINRA's most powerful enforcement tools and a series whose individual rules contain some of the most testable specific standards in the Code.

The key points to retain are these: FINRA Rule 9800 is the series-level marker for the seven-rule Temporary and Permanent Cease and Desist Orders framework encompassing FINRA Rules 9810 through 9870 — it has no operative text but organizes the complete TCDO and PCDO framework and carries a full amendment history; the series was adopted through SR-NASD-98-80 effective June 23, 2003 as announced in Notice to Members 03-35 — introducing FINRA's cease and desist authority on a pilot basis; the series was made permanent through SR-FINRA-2009-034 and SR-FINRA-2009-035 effective June and July 2009 as announced in Regulatory Notice 08-57; the most recent amendment to the series marker is SR-FINRA-2016-043 effective December 15, 2016; the seven rules cover TCDO initiation, Hearing Panel appointment, the TCDO hearing, issuance of the TCDO, review of the TCDO, violation of cease and desist orders, and SEC review; the two-prong standard for TCDO issuance — likelihood of success on the merits and likely significant dissipation of assets or other significant harm to investors before completion of the disciplinary proceeding — is among the most frequently tested specific standards in the Rule 9800 series; the series connects directly to FINRA Rule 9290's mandatory expedited disciplinary proceeding requirement, FINRA Rule 9291's PCDO content requirements, FINRA Rule 9556's TCDO and PCDO violation enforcement, and FINRA Rule 9268(b)(7)'s PCDO content requirement in disciplinary decisions; and three selected notices are associated — 03-35, 04-36, and 08-57.