FINRA Rule 9820

FINRA Rule 9820 was last amended by SR-FINRA-2018-027 effective August 3, 2018. No amendments have been made after that date, confirmed from the FINRA Manual Updates page and a complete search of SEC Federal Register filings. Four selected notices are associated — 03-35, 08-57, 15-35, and 17-22.

FINRA Rule 9820 sits within the 9800 Temporary and Permanent Cease and Desist Orders series of the 9000 Code of Procedure as the appointment rule immediately following FINRA Rule 9810's proceeding initiation framework. It was adopted through SR-NASD-98-80 effective June 23, 2003, and has been amended seven times since adoption.

FINRA Rule 9820(a): The As-Soon-As-Practicable Standard

FINRA Rule 9820(a)'s opening clause — as soon as practicable after the Department of Enforcement files a copy of the notice initiating a TCDO Proceeding or a PCDO Proceeding with the Office of Hearing Officers — establishes the most urgent appointment timing obligation in the Code of Procedure. Unlike standard disciplinary proceedings under the Rule 9200 series where the assignment of a Hearing Officer and appointment of Panelists follows a more measured administrative schedule, the as-soon-as-practicable standard is a maximum urgency obligation tied to the filing of the initiating notice itself. The Chief Hearing Officer must act as quickly as the administrative requirements of identifying qualified, available, and unconflicted adjudicators allow — there is no fixed number of days and no grace period.

The urgency of this timing standard is directly connected to the hearing timeline that follows. FINRA Rule 9830 requires the TCDO hearing to be held within ten days of the filing of the initiating notice. That ten-day window is operationally impossible to meet if the appointment of the Hearing Panel is deferred. The as-soon-as-practicable standard exists precisely to ensure that the Hearing Panel is constituted and ready to preside over pre-hearing matters — including scheduling, any motions filed before the hearing, and the management of the compressed pre-hearing preparation period — immediately after the proceeding begins.

The Hearing Panel Composition: One Hearing Officer and Two Panelists

The Chief Hearing Officer's appointment obligation under FINRA Rule 9820(a) encompasses two simultaneous acts — assigning a Hearing Officer and appointing two Panelists — producing a three-person Hearing Panel that is distinctively constituted for cease and desist proceedings. The Hearing Officer assigned to the TCDO or PCDO proceeding is an OHO staff attorney whose role and qualifications are defined in FINRA Rule 9120(r). The Hearing Officer presides over the proceeding, manages the hearing, and leads the Panel's deliberations.

The two Panelists appointed alongside the Hearing Officer are not OHO staff but industry-experienced individuals drawn from a defined pool of governance participants. Each Panelist must be associated with a member of FINRA or retired therefrom — a requirement that simultaneously ensures industry expertise and excludes persons without relevant market experience from serving on the Panel. This industry-association requirement for Panelists in cease and desist proceedings mirrors the Panelist qualification framework in standard disciplinary proceedings under FINRA Rule 9232 and reflects FINRA's institutional judgment that adjudicators in regulatory proceedings benefit from direct industry knowledge.

The Six Panelist Qualification Criteria

FINRA Rule 9820(a) establishes six alternative criteria from which the Chief Hearing Officer must select each Panelist. Each criterion represents a distinct category of prior FINRA governance service — the common thread being that every eligible Panelist has demonstrated sustained engagement with FINRA's regulatory framework through a defined governance role.

The first criterion — previously served on a District Committee — reflects the historical governance structure under which FINRA's member oversight was organized into district-level committees. District Committee members participated directly in FINRA's regulatory processes including disciplinary hearing panels. Former District Committee members retain eligibility under FINRA Rule 9820(a)(1) notwithstanding the restructuring of District Committees into Regional Committees through SR-FINRA-2018-021.

The second criterion — currently serves or previously served on a Regional Committee — was added by SR-FINRA-2018-021 effective May 18, 2018, as confirmed from the Federal Register filing, as part of the reorganization of FINRA's governance structure that replaced District Committees with Regional Committees mirroring FINRA's administrative regions. The addition of current and former Regional Committee members to the eligible Panelist pool for FINRA Rule 9820 proceedings was a necessary conforming amendment — without it, the pool of eligible Panelists would have been reduced as District Committee members aged out of active service and new governance participants accumulated their experience through the newly constituted Regional Committees rather than the legacy District Committees.

The third criterion — previously served on the National Adjudicatory Council — reflects the highest tier of FINRA's adjudicative governance structure. Former NAC members bring direct appellate adjudication experience in disciplinary matters to TCDO and PCDO proceedings, and their familiarity with FINRA's evidentiary and legal standards is directly relevant to the complex proceedings the Rule 9800 series governs.

The fourth criterion — previously served on a disciplinary subcommittee of the NAC or the National Business Conduct Committee, including a Subcommittee, an Extended Proceeding Committee, or their predecessor subcommittees — encompasses persons who served at the subcommittee level within FINRA's NAC-level appellate structure. The reference to predecessor subcommittees ensures that persons who served on the equivalents of today's Subcommittees and Extended Proceeding Committees under prior governance structures retain eligibility.

The fifth criterion — previously served as a Director or Governor, but does not currently serve in any of these positions — reflects persons who served at the FINRA Board level. Former Directors of FINRA Regulation, Inc. and former Governors of FINRA's Board of Governors bring board-level perspective on FINRA's regulatory mission but are excluded from Panelist service if they currently serve in those positions — ensuring that active FINRA Board members do not simultaneously serve as adjudicators in first-instance cease and desist proceedings.

The sixth criterion — currently serves or previously served on a committee appointed or approved by the FINRA Board, but does not serve currently on the NAC or as a Director or Governor — was added to the Rule 9800 series framework through the same amendment process that added this criterion to FINRA Rule 9231 for standard disciplinary proceedings, expanding the eligible Panelist pool by including persons with committee-level FINRA governance experience beyond the specific governance roles enumerated in the first five criteria. The exclusion of current NAC members and current Directors or Governors reflects a separation of functions principle — persons actively serving in FINRA's appellate or governance oversight roles should not simultaneously serve as first-instance adjudicators in cease and desist proceedings.

FINRA Rule 9820(b): The Modified Impartiality Framework

FINRA Rule 9820(b) establishes that the standard FINRA Rules 9233 and 9234 recusal and disqualification framework governs the Hearing Officer and Panelists appointed under FINRA Rule 9820(a) — with two specific modifications calibrated to the urgency of cease and desist proceedings.

The first modification — a five-day deadline for disqualification motions rather than the standard fifteen-day deadline in FINRA Rules 9233(b) and 9234(b) — is the most operationally significant procedural adaptation in FINRA Rule 9820(b). Under the standard disciplinary proceeding framework, a party who identifies grounds for disqualifying a Hearing Officer or Panelist has fifteen days from the later of the triggering events specified in FINRA Rules 9233(b) and 9234(b) to file a disqualification motion. In cease and desist proceedings, fifteen days would in many cases exceed the entire period from the hearing request to the hearing itself — making the standard deadline completely unworkable in the TCDO context. The five-day compressed deadline gives parties a meaningful window to raise disqualification concerns while accommodating the ten-day hearing timeline of FINRA Rule 9830. A party who identifies a conflict or bias immediately upon learning the Hearing Panel composition must move within five days from the later of the FINRA Rules 9233(b) and 9234(b) triggering events — missing that compressed deadline forfeits the disqualification right.

The second modification — replacement Panelists appointed using the paragraph (a) criteria — ensures that when a Panelist is disqualified or recuses from a cease and desist proceeding, their replacement comes from the same qualified pool as the original appointee. This replacement criteria requirement prevents the improvised appointment of unqualified substitutes during the fast-moving cease and desist proceeding timeline and maintains the institutional quality of the Hearing Panel throughout the proceeding.

The Evolution of the Panelist Criteria: The 2018 Amendment in Context

The most substantively significant amendment in FINRA Rule 9820's history is SR-FINRA-2018-021 effective May 18, 2018, which added the second Panelist criterion — currently serves or previously served on a Regional Committee. This amendment was the direct consequence of FINRA's fundamental restructuring of its member governance infrastructure from District Committees to Regional Committees. The Federal Register filing for SR-FINRA-2018-021 confirmed that FINRA was proposing amendments to FINRA Rules 9231 and 9820 to clarify that former District Committee members and current and former Regional Committee members are eligible to serve as disciplinary hearing panelists — the same conforming amendment applied both to standard disciplinary proceedings under FINRA Rule 9231 and to cease and desist proceedings under FINRA Rule 9820.

SR-FINRA-2018-027 effective August 3, 2018 — the final amendment to FINRA Rule 9820 to date — made conforming updates reflecting the enforcement reorganization changes to FINRA's internal department structure announced in Regulatory Notice 17-22, updating references to the Department of Enforcement throughout the cease and desist proceeding framework.

Connection to FINRA Rules 9120, 9233, 9234, 9810, and 9830

FINRA Rule 9820 connects to FINRA Rule 9120(r) and FINRA Rule 9120(b) — whose definitions of Hearing Officer and Chief Hearing Officer identify the persons whose appointment obligations FINRA Rule 9820(a) governs. It connects to FINRA Rules 9233 and 9234 — whose recusal and disqualification standards govern the appointed Hearing Panel with the five-day deadline modification of FINRA Rule 9820(b). It connects to FINRA Rule 9810 — whose filing of the initiating notice with OHO is the triggering event for the as-soon-as-practicable appointment obligation. And it connects to FINRA Rule 9830 — whose ten-day hearing timeline is the operational constraint that makes the as-soon-as-practicable appointment urgency necessary.

Examination Relevance and Key Takeaways

FINRA Rule 9820 is tested on the Series 7 and Series 24 examinations as the Hearing Panel appointment rule for cease and desist proceedings — a rule with specific testable Panelist qualification criteria and a distinctive impartiality framework modification.

The key points to retain are these: FINRA Rule 9820(a) requires the Chief Hearing Officer to assign a Hearing Officer and appoint two Panelists as soon as practicable after the Department of Enforcement files the initiating notice with OHO; each Panelist must be associated with a FINRA member or retired therefrom; the six alternative Panelist eligibility criteria are — previously served on a District Committee; currently serves or previously served on a Regional Committee — added by SR-FINRA-2018-021 effective May 18, 2018 as part of the District-to-Regional Committee restructuring; previously served on the NAC; previously served on a disciplinary subcommittee of the NAC or the National Business Conduct Committee including Subcommittees and Extended Proceeding Committees and predecessor subcommittees; previously served as a Director or Governor but does not currently serve; or currently serves or previously served on a Board-appointed or Board-approved committee but does not currently serve on the NAC or as Director or Governor; FINRA Rule 9820(b) applies the FINRA Rules 9233 and 9234 recusal and disqualification framework with two modifications — a five-day disqualification motion deadline measured from the later of the triggering events in FINRA Rules 9233(b) and 9234(b) replacing the standard fifteen-day deadline, and replacement Panelists appointed using the paragraph (a) criteria; the five-day compressed deadline reflects the ten-day TCDO hearing timeline of FINRA Rule 9830 which would make the standard fifteen-day deadline unworkable; and the rule was last amended August 3, 2018 through SR-FINRA-2018-027 with no subsequent amendments confirmed.