FINRA Rule 9810

FINRA Rule 9810 was last amended by SR-FINRA-2018-027 effective August 3, 2018 — more recently than the Rule 9800 series marker's last amendment of December 15, 2016, confirming that individual rules within the series have been updated on their own timelines. Four selected notices are associated — 03-35, 08-57, 15-35, and 17-22.

FINRA Rule 9810 sits within the 9800 Temporary and Permanent Cease and Desist Orders series of the 9000 Code of Procedure. It was adopted through SR-NASD-98-80 effective June 23, 2003 as announced in Notice to Members 03-35, amended ten times since adoption through SR-FINRA-2018-027 effective August 3, 2018, with amendment history spanning the rule's complete lifecycle from original pilot adoption through permanent authorization.

FINRA Rule 9810(a): The CEO Authorization Requirement and the Two Proceeding Types

FINRA Rule 9810(a)'s opening clause — with the prior written authorization of FINRA's Chief Executive Officer or such other senior officers as the Chief Executive Officer may designate — establishes the most important threshold requirement in the entire Rule 9800 series. Every cease and desist proceeding under the Rule 9800 series must be specifically authorized in writing by FINRA's Chief Executive Officer or a senior officer the CEO has designated before the Department of Enforcement may serve the initiating notice. This is not a general standing authorization — it is a case-by-case written authorization specific to each proceeding.

The CEO authorization requirement reflects the institutional gravity of cease and desist proceedings. A TCDO notice is not merely a disciplinary complaint — it is the initiation of a proceeding that, if successful, results in an immediately operative court-style injunction against an active market participant. The requirement that FINRA's highest-ranking officer personally authorize each such proceeding ensures that the most powerful interim enforcement tool in FINRA's arsenal is deployed with appropriate institutional oversight and accountability. It also serves as a quality control mechanism — the CEO or designated senior officer reviewing the proposed proceeding must assess whether the factual basis is sufficient and whether the specific violations alleged are among those authorized under paragraph (a)(1) or (a)(2) before the proceeding is initiated.

FINRA Rule 9810(a) authorizes two distinct types of cease and desist proceedings.

The first type — a temporary cease and desist proceeding, designated a TCDO Proceeding — may be initiated with respect to alleged violations of five specific categories: Exchange Act Section 10(b) and SEA Rule 10b-5 thereunder; SEA Rules 15g-1 through 15g-9 — the penny stock trading rules; FINRA Rule 2010 but only if the alleged violation is unauthorized trading, or misuse or conversion of customer assets, or based on violations of Securities Act Section 17(a); FINRA Rule 2020; or FINRA Rule 4330 but only if the alleged violation is misuse or conversion of customer assets.

The enumerated TCDO predicates are deliberately narrow and targeted at the categories of misconduct most likely to involve ongoing investor harm that cannot wait for the full disciplinary proceeding timeline. Exchange Act Section 10(b) and SEA Rule 10b-5 fraud, penny stock manipulation under SEA Rules 15g-1 through 15g-9, unauthorized trading and customer asset misuse under FINRA Rule 2010, market manipulation under FINRA Rule 2020, and customer asset misuse under FINRA Rule 4330 all represent active, continuing misconduct where each additional day of operation causes direct and often irreversible investor harm. The conditional qualifiers on FINRA Rules 2010 and 4330 — limiting TCDO eligibility to unauthorized trading and asset misuse rather than all possible violations of those rules — further focus the TCDO mechanism on the specific categories of active misconduct that pose the most immediate investor protection concerns.

The second type — a permanent cease and desist proceeding, designated a PCDO Proceeding — may be initiated only with respect to alleged violations of Supplementary Material .03 to FINRA Rule 5210. This narrow single-provision PCDO proceeding pathway — distinct from the PCDO that may be imposed as part of a final disciplinary decision under FINRA Rule 9268(b)(7) — addresses a specific category of marked-up pricing or securities pricing disclosure violations under Rule 5210's supplementary material. This standalone PCDO proceeding type is rarely invoked in practice; the vast majority of PCDOs arise from disciplinary proceedings rather than independent PCDO proceedings under FINRA Rule 9810(a)(2).

The Service Framework

FINRA Rule 9810(a) establishes a service framework for the initiating notice that mirrors the urgency-calibrated service requirements found in the most serious categories of Rule 9550 series expedited proceedings. The Department of Enforcement shall serve the notice by personal service, overnight commercial courier, facsimile, or email. Regular U.S. mail is excluded — the same exclusion as FINRA Rules 9556 and 9558 — reflecting the urgency of the cease and desist proceeding context where days matter and postal delivery timelines are inadequate.

If service is made by facsimile or email, the Department of Enforcement shall send an additional copy of the notice by personal service or overnight commercial courier — the same dual service requirement applicable to the most serious Rule 9550 series proceedings. Service is complete upon sending by facsimile or email or overnight courier or delivering in person, except that where duplicate service is required, service is complete when the duplicate service is complete. The notice shall be effective when service is complete.

The option to serve upon counsel or other authorized representative under FINRA Rule 9141 — when counsel or that person agrees to accept service — accommodates the reality that sophisticated respondents in cease and desist proceedings will typically have legal representation before the proceeding formally commences, and that service on counsel may be faster and more reliable than direct service on the respondent.

FINRA Rule 9810(b): The Mandatory Notice Contents

FINRA Rule 9810(b) establishes the three mandatory components that must accompany every cease and desist proceeding notice. Together these three components provide the respondent with everything needed to understand and contest the proceeding from its first moment.

The first mandatory component — a declaration of facts, signed by a person with knowledge of the facts contained therein, that specifies the acts or omissions that constitute the alleged violation — is the evidentiary foundation of the proceeding. The declaration of facts is a signed attestation by a FINRA enforcement staff member or other knowledgeable person who can speak to the specific conduct alleged. It must specify with particularity the acts or omissions at issue — not merely conclusory allegations but the specific transactions, communications, account activities, or other conduct that constitutes the alleged violation. The signed-by-a-person-with-knowledge requirement imports an accountability standard similar to the Federal Rules of Civil Procedure's affidavit requirements — the declarant is personally vouching for the facts stated.

The second mandatory component — a memorandum of points and authorities setting forth the legal theories upon which the Department of Enforcement relies — is the legal foundation of the proceeding. The memorandum identifies the specific statutory provisions and FINRA rules alleged to have been violated, explains the legal standards applicable to those violations, and articulates the legal theory connecting the alleged conduct to the alleged violations. This legal briefing document gives the respondent — and ultimately the Hearing Panel — the complete legal framework of the Department of Enforcement's position at the outset of the proceeding.

The third mandatory component — a proposed order that contains the required elements of an order except the date and hour of issuance — cross-references FINRA Rule 9840's order content requirements. The proposed order is the Department of Enforcement's suggested cease and desist instrument — a draft of the specific relief it is seeking — which the Hearing Panel may accept, modify, or reject. The FINRA Rule 9840(c) elements for TCDOs and FINRA Rule 9840(d) elements for PCDOs define precisely what the proposed order must contain in terms of specificity about the prohibited conduct, the rule provisions violated, and the remedial requirements.

FINRA Rule 9810(c): Consent Settlement Authority

FINRA Rule 9810(c) establishes a streamlined consent settlement mechanism — if the parties agree to the terms of the proposed temporary or permanent cease and desist order, the Hearing Officer shall have the authority to approve and issue the order. This consent authority eliminates the need for a contested hearing when the respondent is willing to accept the cease and desist order on terms negotiated with the Department of Enforcement. The Hearing Officer's approval of the consent order — without a full hearing — is binding and constitutes the same regulatory instrument as an order issued after a contested FINRA Rule 9830 hearing.

The consent settlement pathway is significant in practice because cease and desist proceedings often involve respondents who are willing to agree to the order's terms in exchange for avoiding the adversarial hearing process and its associated costs. The consent pathway enables rapid resolution of the proceeding — achieving investor protection through the operative cease and desist order — without the time and resource expenditure of a contested evidentiary hearing.

FINRA Rule 9810(d): The Concurrent Complaint Requirement

FINRA Rule 9810(d) establishes one of the most structurally important requirements in the Rule 9800 series — the requirement that a concurrent underlying disciplinary complaint be filed simultaneously with the TCDO proceeding notice when no complaint has already been filed. If the Department of Enforcement has not issued a complaint under FINRA Rule 9211 against the respondent relating to the subject matter of the TCDO proceeding and alleging violations of the rule or statutory provision specified in the notice, the Department of Enforcement shall serve and file such a complaint with the notice initiating the TCDO proceeding.

This concurrent complaint requirement reflects the fundamental design principle of FINRA's cease and desist framework — a TCDO is an interim remedy pending the resolution of an underlying disciplinary proceeding, not a standalone enforcement action. The TCDO cannot exist independently of a disciplinary proceeding addressing the same underlying conduct. By requiring simultaneous filing of the underlying complaint when one is not already pending, FINRA Rule 9810(d) ensures that the respondent faces the full disciplinary proceeding on the merits from the outset, and that the TCDO serves its intended bridging function rather than becoming a permanent sanction through regulatory inertia.

The concurrent complaint requirement also triggers FINRA Rule 9290's mandatory expedited disciplinary proceeding standard — when a TCDO proceeding is initiated, the companion disciplinary proceeding must be conducted at the earliest possible time. This ensures that the TCDO's duration — and its regulatory burden on the respondent — is limited to what is genuinely necessary for the pending disciplinary proceeding to reach resolution.

The August 2018 Amendment: SR-FINRA-2018-027

The most recent amendment to FINRA Rule 9810 — SR-FINRA-2018-027 effective August 3, 2018 — reflected the internal enforcement reorganization that updated references to FINRA's enforcement department structure throughout the Code of Procedure. This amendment is consistent with the same SR-FINRA-2018-027 filing that updated references in other Code provisions to reflect organizational changes within FINRA's enforcement and regulatory structure.

Connection to FINRA Rules 9211, 9290, 9820, 9830, 9840, and FINRA Rule 9556

FINRA Rule 9810 connects to FINRA Rule 9211 — whose complaint issuance provisions govern the concurrent underlying complaint that FINRA Rule 9810(d) requires. It connects to FINRA Rule 9290 — whose mandatory expedited disciplinary proceeding requirement is triggered by the concurrent complaint filed under FINRA Rule 9810(d). It connects to FINRA Rule 9820 — whose Hearing Panel appointment follows the FINRA Rule 9810 notice as the next procedural step. It connects to FINRA Rule 9830 — whose hearing procedures govern the contested hearing that follows unless a consent settlement is reached under FINRA Rule 9810(c). It connects to FINRA Rule 9840 — whose order content requirements define what the FINRA Rule 9810(b)(3) proposed order must contain. And it connects to FINRA Rule 9556 — whose expedited enforcement proceeding is available when a TCDO or PCDO issued following FINRA Rule 9810's initiation is violated.

Examination Relevance and Key Takeaways

FINRA Rule 9810 is tested on the Series 7 and Series 24 examinations as the cease and desist proceeding initiation rule — a rule with specific testable predicates, service requirements, notice content elements, and structural requirements that are among the most precisely specified provisions in the entire Rule 9800 series.

The key points to retain are these: FINRA Rule 9810 requires prior written authorization from FINRA's CEO or a designated senior officer before any cease and desist proceeding may be initiated — this is a case-by-case written authorization for each proceeding, not a standing authorization; TCDO proceedings may be initiated for five enumerated violation categories — Exchange Act Section 10(b) and SEA Rule 10b-5, SEA Rules 15g-1 through 15g-9, FINRA Rule 2010 limited to unauthorized trading or customer asset misuse or Securities Act Section 17(a) violations, FINRA Rule 2020, and FINRA Rule 4330 limited to customer asset misuse; PCDO proceedings under FINRA Rule 9810(a)(2) are limited to violations of Supplementary Material .03 to FINRA Rule 5210 — a narrow standalone PCDO pathway distinct from PCDOs imposed in disciplinary decisions; service must be by personal service, overnight commercial courier, facsimile, or email — regular U.S. mail is excluded; facsimile or email service requires duplicate service by personal service or overnight courier; the initiating notice must include a signed declaration of facts with knowledge of the facts, a memorandum of points and authorities, and a proposed order satisfying FINRA Rule 9840's content requirements; the Hearing Officer has authority to approve consent settlements when the parties agree; when no underlying complaint has been filed, one must be filed simultaneously with the TCDO notice under FINRA Rule 9810(d) — triggering FINRA Rule 9290's mandatory expedited disciplinary proceeding requirement; and the rule was last amended August 3, 2018 through SR-FINRA-2018-027 with four selected notices — 03-35, 08-57, 15-35, and 17-22.