FINRA Rule 9870 provides that the right to have an action taken under the temporary and permanent cease and desist series reviewed by the Securities and Exchange Commission is governed by which statutory provision?

Section 15A of the Exchange Act, which sets the terms on which a national securities association is registered

Section 19 of the Exchange Act, which governs Commission oversight of self-regulatory organisation action

Section 21 of the Exchange Act, which supplies the Commission's investigative and enforcement powers

Section 6 of the Exchange Act, which governs the registration of national securities exchanges

A respondent has been made subject to a permanent cease and desist order. Which actions relating to that order may the respondent ask the Commission to review?

The order itself and any decision on an application to modify it, but not an action taken for violating it

The order itself only; the series' internal review decisions and enforcement actions are committed to FINRA and are not reviewable by the Commission

The order itself, a decision on an application to modify or set it aside, and an action taken for violating it

Any action of the Hearing Panel except the issuance of the order, which is committed to FINRA's own judgement

FINRA Rule 9870's first sentence characterises temporary and permanent cease and desist orders as disciplinary sanctions imposed by FINRA. What does that characterisation settle?

That the order sits in the same sanctions category as a fine, a suspension or a bar, whatever their differences

That the order may be imposed only on the evidentiary showing a fine or a suspension would require of the Department

That the order takes effect only once the standard effectiveness timeline for a sanction has run

That the order replaces any fine or suspension the Panel might otherwise have imposed for the same conduct

The cease and desist series lets a party apply to have an issued order modified, set aside, limited or suspended. Why does the availability of that route not prevent the order from being final FINRA action?

Because the right to apply belongs to the Department of Enforcement alone, so a respondent cannot invoke the route at all

Because the issuing Panel, or the underlying case's Panel, hears it as a request to modify, not as an appeal upward

Because the Panel's decision on such an application is itself the final action, superseding the order it reviews

Because applying to the Commission for review causes any pending modification application to be dismissed by the Panel

A Hearing Panel issues and serves a temporary cease and desist order. The respondent's counsel advises seeking National Adjudicatory Council review first, on the view that the Commission will not take the matter until FINRA's internal process has been exhausted. What is wrong with that advice?

Nothing is wrong with it; the Commission will not entertain an application until the Council has ruled on the order

The Council reviews an order of this kind on its own motion, so no application from the respondent is needed to begin it

No further internal step is needed; the order may be taken to the Commission as soon as it is issued and served

The Council does hear such an application, but only once the order has been in effect for the minimum period the series prescribes

A respondent argues that a temporary cease and desist order ought to be paused automatically once an application for Commission review is filed, since the Commission may yet overturn it. What in the basis on which a temporary order is issued answers the respondent's argument?

It issued only after the respondent's internal remedies were exhausted, so the Commission's review is confined to questions of procedure

It issued on terms the respondent had the chance to contest, which waives any claim to relief from the order while review runs

It issued on proof by a preponderance that the violation occurred, so the Commission's review cannot disturb the finding supporting it

It rests on a finding that significant investor harm is likely before the case ends, which a pause would let resume

Mr. Okafor, who is subject to a temporary cease and desist order, files an application to the Hearing Panel to have the order set aside and, the same week, an application for Commission review. Neither filing pauses the order. Who could order a stay in connection with each filing?

On the Panel application, the Hearing Panel that is considering it; on the review application, the National Adjudicatory Council

On the Panel application, the Hearing Panel that is considering it; on the review application, the Commission itself

On both applications, the Commission alone, since a pending review draws every question about staying the order to the Commission

A respondent under a permanent cease and desist order has applied for Commission review and wants the order paused while the review runs. What must the respondent demonstrate to obtain that relief?

That the Department of Enforcement consents, a stay pending review being granted on the parties' joint request

That a stay is warranted even though the Hearing Panel made the findings that justified issuing the order

That the Hearing Panel's findings were wrong, a stay being available only once the order is shown to be invalid

Nothing beyond a timely application for review, which pauses the order until the Commission has decided it

Ms. Duval is barred in a decision constituting final disciplinary action of FINRA and, in a separate matter, is subject to a permanent cease and desist order. She files applications for Commission review of both. What is the position of each while the reviews are pending?

Both are stayed until the reviews end, unless FINRA shows good cause to keep them in force

The bar is stayed until its review ends, while the order continues in effect

Both remain in effect, the review applications staying neither the bar nor the order

The bar continues in effect, while the order waits until its review is complete

The Department of Enforcement and a respondent agree the terms of a permanent cease and desist order, and the Hearing Officer approves and issues it without a hearing. What is the status of that order?

A settlement term rather than a sanction, binding the respondent in the way a contract between it and FINRA would

A final sanction, but one that becomes effective only when the underlying disciplinary proceeding has been decided

A disciplinary sanction, but one that takes effect only once the full Hearing Panel ratifies the Hearing Officer's approval

A final and immediately effective disciplinary sanction, exactly as an order issued after a contested hearing would be

A temporary cease and desist order takes effect when service is complete unless it specifies otherwise, and this one specifies nothing. It records its issuance at 9:30 a.m.; the Office of Hearing Officers submits it to the OHO Portal at 3:15 p.m. the same day; the respondent first opens the Portal the next morning. When did the order take effect?

At 3:15 p.m., when it was submitted to the Portal

The next morning, when the respondent first opened it in the Portal

At the start of the next business day after the Portal submission

At 9:30 a.m., the Portal submission relating back to the recorded hour of issuance

A respondent's counsel has agreed to accept service of a permanent cease and desist order on the respondent's behalf. The Office of Hearing Officers serves counsel on a Thursday, and counsel forwards the order to the respondent the following Monday. The order specifies no other effective time. From when is it effective?

From Thursday, but only if the respondent was also served directly that day

From Thursday, when service on counsel was complete

From Tuesday, one business day after counsel forwarded it to the respondent

From Monday, when the respondent personally received the order from counsel

Crestline Securities, a member firm, receives a temporary cease and desist order directed at it on a Thursday and files an application for Commission review the same afternoon. Friday is a business day. By when must Crestline deliver copies of the order to its associated persons?

By Thursday itself, delivery being due on the same business day the order is received

Within one business day of the Commission's decision, the duty waiting on the outcome of the review

By Friday, one business day after Thursday's receipt, the review application changing nothing

Within one business day of the Commission docketing the application for review

A member firm subject to a temporary cease and desist order applies for Commission review and, while the application is pending, transfers its business to a newly formed firm. What is the newly formed firm's position under the order?

It is bound, but only once the Commission's review has been completed, a successor taking the order as it then stands

It is bound by what the order prohibits but not by the acts it requires, which remain with the transferring firm

It is not bound, the order attaching only to the respondent that was before the Hearing Panel and to no other firm

It is bound, as the respondent's successor, by what the order prohibits and requires, the pending review notwithstanding

A permanent cease and desist order directs a member firm to adopt specified supervisory procedures, and the firm is suspended under it. The firm applies for Commission review and, while the application is still pending, adopts the procedures in full. What is the firm's position from the day it adopts them?

Its suspension ends, the order suspending the firm until the required action is taken

It stays suspended until the Hearing Panel, on a Rule 9850 application, finds the procedures adequate

It stays suspended until the Commission decides, a pending review fixing the order's terms as they stood

It stays suspended until the underlying disciplinary case is decided, when a permanent order lapses

A respondent has applied for Commission review of a temporary cease and desist order. Before the Commission rules, the Hearing Panel hearing the related disciplinary case issues its decision under FINRA Rule 9268. What becomes of the temporary order?

It converts into a permanent order on the same terms, lasting until the Commission's review is completed

It continues until the Rule 9268 decision becomes final disciplinary action once the time for appeal has run

It continues until the Commission decides the review, the Commission's decision being what ends an order under review

Seven months after a temporary cease and desist order was served, with the respondent's application for Commission review still pending, the respondent's business changes in a way that bears on the order. May the respondent now apply to the Hearing Panel to have the order modified?

No; after a set period from service the order may be changed only on a motion brought by the Department of Enforcement

Yes, but it is heard after the Commission has decided the review, the Panel application waiting until then

Yes; an application to modify may be made at any time after service, however long the review has been running

Yes, but only on facts that could not have been put before the Hearing Panel at the original hearing

Enforcement staff believe a member firm has failed to comply with a permanent cease and desist order. The head of the Department of Enforcement signs a written authorization to begin a proceeding against the firm under FINRA Rule 9860. Is that authorization sufficient?

Yes; the head of Enforcement authorizes every proceeding the Department brings, and this authorization is written

No; such a proceeding needs the National Adjudicatory Council's prior approval, given by resolution

Only if the Chief Hearing Officer countersigns it, the Office of Hearing Officers then assigning a Hearing Officer

Only if FINRA's Chief Executive Officer has designated the head of Enforcement to authorize such proceedings

A firm under a temporary cease and desist order has applied for Commission review of it. FINRA staff then serve a FINRA Rule 9556 notice stating that failure to comply within seven days of service will result in suspension, and the firm makes a timely request for a hearing under FINRA Rule 9559. How do the two filings bear on the notice and on the order?

The hearing request ordinarily stays the notice's suspension; the review application did not stay the order

Both work a stay, the hearing request and the review application each suspending the instrument it challenges

Neither works a stay, a hearing request on a notice suspending no more than an application for review does

The review application stayed the order; the hearing request leaves the suspension to take effect after seven days

A member firm was served a FINRA Rule 9556(a) notice last year for failing to comply with one provision of a permanent cease and desist order. It now fails to comply with a different provision of the same order. What route does FINRA Rule 9556(h) open to FINRA staff?

A fresh Rule 9556(a) notice, which the firm may again answer by requesting a Rule 9559 hearing within the notice period

A petition to the Office of Hearing Officers seeking a Rule 9559 hearing and the imposition of any fitting sanctions

A new proceeding for a further permanent order on the same conduct, the existing order having failed

A Rule 9559 hearing that the Panel which issued the order convenes on its own motion, with no filing by staff

A permanent cease and desist order was imposed on a firm as a sanction in a final disciplinary decision rather than through the Rule 9800 series. The firm fails to comply with it. How does the route for enforcing that order compare with the route for a temporary order issued under FINRA Rule 9840?

It is the same expedited route, but for such an order the notice first needs the Council's approval

It differs: such an order is enforced by a fresh complaint, the expedited Rule 9556 route reaching 9800-series orders

It is the same expedited route, which reaches orders issued under the Rule 9200, 9300 or 9800 Series

It differs: an order in a disciplinary decision is enforced by the National Adjudicatory Council, which reviewed or imposed it

In an expedited proceeding for violating a cease and desist order, a firm's membership is cancelled and its principal is suspended. Both the firm and the principal file timely applications for Commission review. What is the effect of those filings?

The cancellation takes effect at once; the principal's suspension waits until the Commission completes its review

Both take effect at once, final action in an expedited proceeding never waiting on the outcome of a Commission review

Neither takes effect until the review is complete, each timely application staying the sanction it challenges

The principal's suspension stays in effect during review; the cancellation takes effect only once the review is complete

A registered representative is fined in a decision constituting final disciplinary action and, in a separate matter, is subject to a temporary cease and desist order. He files applications for Commission review of both. What effect do the filings have?

The fine is stayed by its filing; the temporary order stays in effect

The fine and the order both continue, neither filing staying anything

The fine and the order are both stayed until each review is complete

The temporary order is stayed by its filing; the fine remains payable

FINRA denies a disqualified member's application for continued membership, and in a separate proceeding a temporary cease and desist order is issued against the same firm. The firm timely applies for Commission review of both. What is the position while the reviews are pending?

Both are held in abeyance until the Commission has completed its review of each

The denial does not take effect until the review is complete; the order remains in effect

Both remain in effect, the eligibility rule and the cease and desist rule sharing one non-stay sentence

The order is held in abeyance until the review is complete; the denial takes effect at once

A Hearing Panel in an ordinary disciplinary proceeding suspends a registered representative, and its decision says nothing about when the suspension begins. Separately, a temporary cease and desist order is issued and served on another respondent. Before any application for review is made, when does each take effect?

The suspension takes effect on the Panel's decision; the order likewise needs neither finality nor a set date

The suspension takes effect on the Panel's decision; the order only once the time to apply for Commission review has run

The suspension waits for finality and then for a date FINRA sets; the order needs neither to take effect

Both wait for finality and then for a date FINRA sets, the order being a disciplinary sanction like the suspension

A Hearing Panel issued a temporary cease and desist order against a firm three weeks ago, the temporary proceeding having concluded with that order, and the firm has since applied for Commission review of it. The disciplinary proceeding on the same subject matter is at an early stage. Does FINRA Rule 9290's requirement of expedited hearings and decisions still apply to that disciplinary proceeding?

Yes, but for the hearing only; the decision then follows on the ordinary timetable once the hearing record in the case has closed

No; it applied only while the temporary proceeding was pending before the Hearing Panel, and it lapsed once the order had issued

No; while the order is before the Commission, the disciplinary proceeding runs on the ordinary timetable until the review has ended

Yes; it covers a proceeding whose subject matter is subject to a temporary order, not only to a temporary proceeding still pending

In a decision issued under FINRA Rule 9349 and constituting final disciplinary action of FINRA, the National Adjudicatory Council expels a member firm. The firm has decided not to apply to the Commission for review. From when is the expulsion effective?

Once the time for applying to the Commission for review has expired without any application having been filed

On a date that FINRA staff determine and notify to the firm after the Council's decision has been served on it

Immediately on service of the decision, as final disciplinary action, whether or not the firm later seeks review

Only once the FINRA Board has confirmed the Council's decision on a call for review of it under FINRA Rule 9351

Ms. Tan, subject to a temporary cease and desist order, applies for Commission review on 1 March and asks for the order to be stayed. Between 5 and 20 March she continues the conduct the order prohibits. A stay is ordered on 30 March. Was her conduct between 5 and 20 March a violation of the order?

Only if she was warned; conduct in good-faith reliance on a pending application for review is not treated as a violation of it

Yes; the order bound her from the filing until the stay was actually ordered, and the stay does not reach back over that period

No; a stay ordered on an application relates back to the date of the filing, and so it covers what she did while it was pending

No; once she had asked for a stay, the order could not be enforced against her until that request had been decided either way

FINRA Rule 9870 routes the right to have any action under the cease and desist series reviewed by the Commission to the same provision of the Exchange Act that the Code invokes for disciplinary proceedings, for eligibility proceedings and for automated systems grievances. What does the Code provide for final FINRA action by using that one statutory anchor throughout?

Final action of the National Adjudicatory Council reaches the Commission, while final action of a Hearing Panel or a Hearing Officer stands as FINRA's last word

Each series directs its own category of final action to a statutory review route matched to the kind of proceeding that produced it

Every category of final FINRA action reaches the Commission under one external oversight framework, whatever internal series produced the action

Only sanctions imposed in disciplinary proceedings reach the Commission, final action under the Code's other series being challengeable in the federal courts alone

An expedited cease and desist proceeding moves far faster than an ordinary disciplinary proceeding. What becomes of the due process protections a respondent would otherwise have?

They are suspended until the order issues, and restored if the respondent seeks review

They apply unchanged, the series differing only in the sanction it can impose

They are replaced by the Commission's review, FINRA holding no hearing of its own

They are preserved but compressed, each step calibrated to the proceeding's urgency

FINRA Rule 9870 | Financial Regulation Courses

Application to SEC for Review

SERIES 7 | SERIES 24 | FINANCIAL REGULATION COURSES

FINRA Rule 9870 is the final rule of the Rule 9800 Temporary and Permanent Cease and Desist Orders series — the provision that establishes the external appellate pathway for cease and desist orders, confirms their status as final and immediately effective FINRA disciplinary sanctions, and defines the critical non-stay default that governs an order's continued operation while SEC review is pending. The rule consists of three sentences. The first establishes the foundational characterization: temporary and permanent cease and desist orders issued pursuant to the Rule 9800 series constitute final and immediately effective disciplinary sanctions imposed by FINRA. The second establishes the external review pathway: the right to have any action under the Rule 9800 series reviewed by the SEC is governed by Exchange Act Section 19 — the same statutory framework that governs SEC review of disciplinary proceedings under FINRA Rule 9370, eligibility proceedings under FINRA Rule 9527, and automated systems grievances under FINRA Rule 9770. The third establishes the non-stay default: the filing of an application for review shall not stay the effectiveness of a TCDO or PCDO, unless the SEC otherwise orders. Together these three sentences complete the Rule 9800 series by ensuring that cease and desist orders — FINRA's most urgent interim and permanent enforcement remedies — remain operative and enforceable even while a respondent pursues external review, unless the SEC itself determines that a stay is warranted.

FINRA Rule 9870 sits within the 9800 Temporary and Permanent Cease and Desist Orders series of the 9000 Code of Procedure as the series' final rule, following FINRA Rule 9860's violation enforcement provision. It was adopted through SR-NASD-98-80 effective June 23, 2003 and has been amended four times, most recently by SR-FINRA-2016-043 effective December 15, 2016. No amendments have occurred after that date. Three selected notices are associated — 03-35, 08-57, and 17-22.

The First Sentence: Final and Immediately Effective Disciplinary Sanctions

FINRA Rule 9870's opening characterization — temporary and permanent cease and desist orders issued pursuant to this Rule Series constitute final and immediately effective disciplinary sanctions imposed by FINRA — performs essential legal work that distinguishes the Rule 9800 series from the standard Rule 9200 and 9300 series disciplinary framework.

The final characterization confirms that a TCDO or PCDO issued under FINRA Rule 9840 is not a preliminary or interlocutory step subject to further internal FINRA review before it takes effect — it is FINRA's final action with respect to the specific cease and desist relief sought, immediately upon issuance. This stands in contrast to a standard Hearing Panel decision under FINRA Rule 9268 in disciplinary proceedings, which does not constitute final FINRA action until the NAC appeal period under FINRA Rule 9311 has run or NAC review under FINRA Rule 9310 has concluded. A TCDO or PCDO has no equivalent internal appellate layer within the Rule 9800 series itself — FINRA Rule 9850's review mechanism is a request to the same Hearing Panel, or to the Hearing Panel appointed in the underlying disciplinary proceeding, for modification, not an appeal to a higher adjudicative body, and FINRA Rule 9870 confirms that the cease and desist order is final FINRA action notwithstanding the availability of FINRA Rule 9850 review.

The immediately effective characterization confirms the operative timing — a TCDO or PCDO takes effect immediately, consistent with FINRA Rule 9840(f)'s provision that the order is effective when service is complete unless otherwise specified. This immediacy is the defining feature that makes cease and desist orders meaningfully different from standard disciplinary sanctions, most of which take effect on a date determined by FINRA staff under FINRA Rule 9360's framework and are stayed under FINRA Rule 9370 while an application for SEC review is pending. A TCDO exists specifically because waiting for that standard effectiveness timeline would allow continued investor harm — and FINRA Rule 9870's first sentence confirms that this immediacy is not merely operational practice but a defined legal characterization of what a cease and desist order is.

The disciplinary sanctions characterization situates cease and desist orders within FINRA's broader sanctions framework under FINRA Rule 8310 — confirming that a TCDO or PCDO is a disciplinary sanction in the same legal category as a fine, suspension, or bar, even though its content and purpose differ substantially from those more familiar sanction types. This characterization has downstream consequences for how cease and desist orders are treated in FINRA's disciplinary actions disclosure framework and in the broader regulatory and legal context in which FINRA sanctions are discussed.

The Second Sentence: SEC Review Under Exchange Act Section 19

FINRA Rule 9870's second sentence — the right to have any action under this Rule Series reviewed by the SEC is governed by Section 19 of the Exchange Act — establishes the external appellate pathway using the identical formulation found in FINRA Rule 9370 for disciplinary proceedings and FINRA Rule 9527 for eligibility proceedings, with FINRA Rule 9770 for automated systems grievances providing for application for review to the SEC in accordance with the Exchange Act. This consistent statutory anchor across all four of these SEC review provisions reflects FINRA's design principle of applying the same external oversight framework to every category of final FINRA action, regardless of which internal proceeding series produced that action.

The any action under this Rule Series formulation is broad — it encompasses not only the TCDO or PCDO itself as issued under FINRA Rule 9840, but also any decision on a FINRA Rule 9850 application to modify, set aside, limit, or suspend the order; a sanction for violation of the order, which FINRA Rule 9860 routes to FINRA Rule 9556, is reviewable by the SEC under the same Section 19 framework through FINRA Rule 9559. A respondent aggrieved by any of these actions within the Rule 9800 series framework may seek SEC review under the Exchange Act Section 19 framework — which encompasses both Section 19(d)'s administrative review provisions and the broader Section 19 framework governing SEC oversight of self-regulatory organization actions.

Because a TCDO or PCDO constitutes final FINRA action under FINRA Rule 9870's first sentence, a respondent need not exhaust any further internal FINRA review process before seeking SEC review — the order is immediately ripe for SEC review from the moment it is issued and served. This contrasts with the disciplinary proceedings framework under FINRA Rule 9370, where a Hearing Panel decision under FINRA Rule 9268 typically must proceed through NAC review — or the expiration of the NAC call-for-review period — before becoming final FINRA action subject to SEC review.

The Third Sentence: The Non-Stay Default

FINRA Rule 9870's third sentence — the filing of an application for review shall not stay the effectiveness of a temporary or permanent cease and desist order, unless the SEC otherwise orders — is the most operationally significant provision in the rule and the direct counterpart to FINRA Rule 9850's non-stay default for FINRA Rule 9850 applications.

This non-stay default means that a respondent who files an application for SEC review of a TCDO or PCDO does not thereby obtain any automatic relief from the order's continuing effectiveness during the pendency of SEC review — which, depending on the complexity of the matter and the SEC's docket, could take months. The order remains fully operative and enforceable throughout the SEC review process unless the SEC itself orders a stay.

The unless the SEC otherwise orders formulation places the stay determination entirely in the SEC's hands — neither FINRA nor the respondent unilaterally controls whether a stay is granted during SEC review. A respondent seeking a stay of a TCDO or PCDO pending SEC review must apply to the SEC itself for that relief, demonstrating to the Commission's satisfaction that a stay is warranted notwithstanding the Hearing Panel's findings under FINRA Rule 9840 that justified the order's issuance in the first place.

This non-stay default is doctrinally consistent with the broader non-stay principles found throughout the Rule 9800 series and the Code more generally for bars and cease and desist orders, although an expulsion does not take effect until SEC review is complete. FINRA Rule 9360 provides that a bar takes effect immediately upon service of the decision constituting final disciplinary action, and FINRA Rule 9370 provides that filing an SEC review application does not stay a bar's effectiveness. FINRA Rule 9870's non-stay default for cease and desist orders follows the same logic — just as a bar's investor protection purpose would be undermined if its mere appeal automatically suspended its effect, a TCDO's or PCDO's investor protection purpose — preventing significant dissipation, conversion, market disruption, or other harm — would be undermined if filing an SEC review application automatically restored the status quo ante that the order was specifically designed to prevent.

FINRA Rule 9870 and the Completed Rule 9800 Series Architecture

FINRA Rule 9870 completes a coherent end-to-end framework that began with FINRA Rule 9800's series marker and FINRA Rule 9810's initiation provisions. The complete sequence is: FINRA Rule 9810 initiates the proceeding with CEO authorization, the enumerated TCDO or PCDO predicates, and the mandatory notice contents; FINRA Rule 9820 appoints the specialized Hearing Panel with its industry-experienced Panelists and compressed five-day disqualification deadline; FINRA Rule 9830 conducts the hearing within fifteen days, with video conference authority and the full evidentiary and record-keeping framework; FINRA Rule 9840 issues the order applying the likelihood-of-success standard for TCDOs and the preponderance standard for PCDOs, with defined content requirements and duration rules; FINRA Rule 9850 provides the at-any-time review mechanism with its non-stay default and jurisdictional transfer rule; FINRA Rule 9860 establishes the consequences for violating the issued order through the FINRA Rule 9556 enforcement pathway; and FINRA Rule 9870 provides the external SEC review pathway with its own parallel non-stay default.

Every stage of this sequence reflects the same underlying design philosophy — urgency and investor protection take priority, due process protections are preserved but compressed and calibrated to that urgency, and at every point where a party might seek to delay or suspend the order's effect — through FINRA Rule 9850 review or FINRA Rule 9870 SEC review — the default rule favors continued enforcement unless an affirmative showing of good cause persuades the relevant decision-maker otherwise.

Connection to FINRA Rules 8310, 9360, 9370, 9527, 9770, 9840, and 9850

FINRA Rule 9870 connects to FINRA Rule 8310 — whose sanctions framework provides the disciplinary sanctions category within which FINRA Rule 9870's first sentence situates cease and desist orders. It connects to FINRA Rule 9360 and FINRA Rule 9370 — whose treatment of bars (effective upon service of the final decision and not stayed by an SEC review application) provides the doctrinal precedent for FINRA Rule 9870's non-stay default for cease and desist orders. It connects to FINRA Rule 9370, FINRA Rule 9527, and FINRA Rule 9770 — three other SEC review provisions across the Code that invoke the Exchange Act framework, the first two in the identical Section 19 formulation, confirming FINRA Rule 9870 as part of a consistent family of external review provisions. It connects to FINRA Rule 9840 — whose issued orders are immediately final and effective under FINRA Rule 9870's first sentence, ripe for SEC review without further internal proceedings. And it connects to FINRA Rule 9850 — whose non-stay default for internal review applications is mirrored by FINRA Rule 9870's non-stay default for external SEC review applications, creating a consistent two-layer non-stay framework across both the internal and external review pathways.

Who Can Stay a Cease and Desist Order Once Review Is Sought

FINRA Rule 9870's third sentence names one decision-maker. The filing of an application for SEC review "shall not stay the effectiveness of a temporary or permanent cease and desist order, unless the SEC otherwise orders". The only order that sentence recognises as overriding the default is an order of the SEC.

The internal route has a different decision-maker. FINRA Rule 9850 provides that the filing of an application to the Hearing Panel "shall not stay the effectiveness of a temporary or permanent cease and desist order, unless the Chief Hearing Officer or the Deputy Hearing Officer assigned to the matter orders otherwise for good cause shown". Consider Ms. Reyes, who is subject to a temporary cease and desist order. She files an application under FINRA Rule 9850 to have it set aside, and the same week she files an application for review with the SEC. Neither filing stays the order. The stay that FINRA Rule 9850 contemplates for her Hearing Panel application is one ordered by the Chief Hearing Officer or the assigned Deputy Hearing Officer. The stay that FINRA Rule 9870 contemplates for her SEC application is one ordered by the SEC.

Because neither filing stays the order, Ms. Reyes remains bound by it from the day she files until a stay is actually ordered. If she continues the conduct the order prohibits in the meantime, she is violating an order that is in effect. FINRA Rule 9860 provides that a Respondent who violates a temporary or permanent cease and desist order imposed under the Rule 9800 series "may have its association or membership suspended or canceled or be subject to any fitting sanction under Rule 9556". A pending application for review does not shelter conduct the order forbids.

The reason for the default follows from what a temporary order is for. A Hearing Panel imposes a temporary cease and desist order only on finding that the alleged conduct "is likely to result in significant dissipation or conversion of assets or other significant harm to investors prior to the completion of the underlying disciplinary proceeding". If filing for SEC review suspended the order, that harm could resume for as long as the review lasted, which is the harm the order was issued to prevent.

Which Orders the First Sentence Reaches, and When They Take Effect

FINRA Rule 9870's first sentence applies to temporary and permanent cease and desist orders "issued pursuant to this Rule Series". It is not limited to orders issued after a contested hearing. Under FINRA Rule 9810(c), 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". An order issued that way is issued pursuant to the Rule 9800 series, so it is a final and immediately effective disciplinary sanction in the same way as an order the Hearing Panel issues after a hearing.

The same holds for an order issued when a respondent does not appear. FINRA Rule 9830(h) provides that if a Respondent fails to appear at a hearing for which it has notice, the allegations in the notice and accompanying declaration may be deemed admitted, and the Hearing Panel may issue a temporary or permanent cease and desist order "without further proceedings". Such an order is issued under the Rule 9800 series, so it is final and immediately effective, and the right to SEC review of it is governed by Section 19 of the Exchange Act like any other action under the series.

"Immediately effective" is tied to service, not to the moment of issuance. A temporary or permanent cease and desist order must include the date and hour of its issuance. FINRA Rule 9840(f) then provides that the order "shall be effective when service is complete, unless otherwise specified therein", and that service through the OHO Portal "shall be deemed complete upon submitting the document(s) to the OHO Portal". Suppose an order states that it was issued at 10:00 a.m. and the Office of Hearing Officers submits it to the Portal at 2:00 p.m. the same day. Unless the order specifies otherwise, it takes effect at 2:00 p.m., on submission, whether or not the respondent has opened the Portal by then.

Service may be made on counsel. FINRA Rule 9840(f) directs the Office of Hearing Officers to serve the order on the Respondent, or on counsel or another person authorised to represent others under FINRA Rule 9141 "when counsel or other person authorized to represent others under Rule 9141 agrees to accept service for the Respondent". Where counsel has agreed, service on counsel is the service that completes, and the order takes effect when that service is complete, whenever counsel later passes it to the client.

What Keeps Running While SEC Review Is Pending

Because the filing of an application for SEC review does not stay the order, every obligation that flows from the order keeps running while the application is pending. Several of them are set by the order's own rule.

A member firm that is a respondent has a delivery duty. FINRA Rule 9840(g) requires the firm to deliver a copy of a temporary or permanent cease and desist order to its associated persons "within one business day of receiving it". Suppose Harbor Point Securities receives an order on a Monday and files an application for SEC review that afternoon. The filing does not suspend the delivery duty, which runs from the firm's receipt of the order. Harbor Point must deliver copies to its associated persons within one business day of that Monday receipt, that is, by Tuesday where Tuesday is a business day.

Where the respondent is an individual, the firm he works for still learns of the order. FINRA Rule 9840(f) requires the Office of Hearing Officers to "provide a copy of a temporary or permanent cease and desist order to each FINRA member with which a Respondent is associated". A registered representative who is subject to an order and files for SEC review cannot keep it from his employer, because the employer receives its copy from the Office of Hearing Officers.

A temporary order against a member firm binds more than the firm. FINRA Rule 9840(c) extends a temporary cease and desist order to "any successor of a Respondent, where the Respondent is a member firm". Suppose Harbor Point, while its application for SEC review is pending, transfers its business to a newly formed successor firm. The successor is bound by the order's prohibitions and by the acts it requires, and the pending application does not change that.

A permanent order carries its own suspension. FINRA Rule 9840(d)(3) requires a permanent cease and desist order to describe the act or acts the Respondent is to take or refrain from taking "and to suspend the Respondent unless and until such action is taken or refrained from". A respondent who files for SEC review of a permanent order therefore remains suspended while the application is pending, until it takes (or refrains from) the action the order describes or the SEC orders a stay. The suspension ends on compliance, not on filing.

A temporary order has a fixed end point in the underlying case. FINRA Rule 9840(e)(1) provides that it "shall remain effective and enforceable until the issuance of a decision under Rule 9268 or Rule 9269, or until a settlement offer is accepted pursuant to Rule 9270". Suppose Ms. Reyes's application for SEC review of her temporary order is still pending when the Hearing Panel in the underlying disciplinary proceeding issues its decision under FINRA Rule 9268. The temporary order stops being effective and enforceable when that decision issues. What ends it is the decision in the underlying case, not the SEC.

That underlying case moves quickly by rule. Under FINRA Rule 9810(d), if the Department of Enforcement has not already issued a complaint relating to the subject matter of the temporary cease and desist proceeding and alleging the violations specified in the notice, it must serve and file one with the notice initiating that proceeding. FINRA Rule 9290 then provides that for any disciplinary proceeding whose subject matter is also subject to a temporary cease and desist proceeding or order, "hearings shall be held and decisions shall be rendered at the earliest possible time", on an expedited schedule set at a pre-hearing conference. A respondent pursuing SEC review of a temporary order is therefore also defending an expedited disciplinary proceeding on the same subject matter.

The internal route stays open too. FINRA Rule 9850 allows a Party to apply to the Hearing Panel to have the order modified, set aside, limited or suspended "at any time after" the Office of Hearing Officers serves it. A respondent whose circumstances change months after issuance, while an application for SEC review is still pending, can make that application then, setting forth with specificity the facts that support the request.

SEC review also affects the record. FINRA Rule 9830(g) makes the Office of Hearing Officers custodian of the record of the cease and desist hearing. Proffered evidence that the Hearing Panel did not accept into the record "shall be retained by the custodian of the record until the date when FINRA's decision becomes final or, if applicable, upon the conclusion of any review by the SEC or the federal courts". Where a respondent has applied for SEC review, evidence the Hearing Panel rejected is kept until that review concludes.

Violating an Order During Review: FINRA Rules 9860, 9556 and 9559

FINRA Rule 9860 is where the Rule 9800 series deals with violations. It provides that a violator may have its association or membership suspended or canceled or be subject to any fitting sanction under FINRA Rule 9556. It also requires that "FINRA's Chief Executive Officer or such other senior officer as the Chief Executive Officer may designate must authorize the initiation of any such proceeding in writing". Suppose Enforcement staff learn that a respondent with an application for SEC review pending has resumed the prohibited conduct. Before any proceeding for the violation begins, that written authorization must be in hand.

FINRA Rule 9556 reaches orders from more than one series. Its paragraph (a) applies when a member or person "fails to comply with a temporary or permanent cease and desist order issued under the Rule 9200, 9300 or 9800 Series". A permanent cease and desist order imposed as a sanction in a disciplinary decision is therefore enforced through the same expedited route as a temporary order issued under FINRA Rule 9840.

Under FINRA Rule 9556(a), FINRA staff issue a notice stating that failure to comply with the order within seven days of service will result in a suspension or cancellation of membership or a suspension or bar from associating with any member. A copy of a notice served on a person associated with a member "also shall be served on such member". If the violator is a registered representative, his firm is served with a copy of the notice.

The notice and the order are treated differently when challenged. The suspension, cancellation or bar in the notice becomes effective seven days after service "unless stayed by a request for a hearing pursuant to Rule 9559". Under FINRA Rule 9559(c)(1), a timely request for a hearing stays the effectiveness of the notice unless the Chief Hearing Officer or the Hearing Officer assigned to the matter orders otherwise for good cause shown. So a respondent who requests a hearing on a Rule 9556 notice ordinarily keeps the notice's suspension from taking effect. The same respondent's application for SEC review of the underlying cease and desist order did not stay the order.

Repeated failure takes a different route. Where the member or person has previously been served with a notice under FINRA Rule 9556(a) for a failure to comply with any provision of the same temporary or permanent cease and desist order, FINRA Rule 9556(h) allows FINRA staff, with the same written authorization, to file a petition with the Office of Hearing Officers seeking a hearing pursuant to FINRA Rule 9559 and the imposition of any fitting sanctions.

A sanction imposed in that expedited proceeding has its own SEC review provision. FINRA Rule 9559(r) provides that the right to have any action pursuant to that rule reviewed by the SEC is governed by Section 19 of the Exchange Act, and that the filing of an application for review "shall not stay the effectiveness of final FINRA action, unless the SEC otherwise orders". It then makes an exception: an expulsion or cancellation of membership does not become effective until the time for filing an application for review with the SEC has expired and no application is filed or, if one is timely filed, until the SEC completes its review. Suppose a firm's membership is cancelled and its principal is suspended for violating an order, and both apply to the SEC. The principal's suspension stays in effect during review, but the firm's cancellation does not take effect until the SEC review is complete.

The Non-Stay Default Compared Across the Code

FINRA Rule 9870 is one of several provisions that deal with the effect of seeking SEC review, and they do not all point the same way. In disciplinary proceedings, FINRA Rule 9370(a) provides that the filing with the SEC of an application for review "shall stay the effectiveness of any sanction, other than a bar, or an expulsion under Rule 9268 or 9269, imposed in a decision constituting final disciplinary action of FINRA". Suppose a respondent is fined in a final disciplinary decision and, separately, is subject to a temporary cease and desist order, and applies to the SEC for review of both. The fine is stayed by the filing, but the cease and desist order is not.

At the other end is expulsion. Under FINRA Rule 9360, an expulsion "shall not become effective until the time for filing an application for review with the SEC has expired and no such application is filed or, if such an application is timely filed, until the SEC completes its review under Exchange Act Section 19". FINRA Rule 9370(a) applies that rule to an expulsion in a decision issued under FINRA Rule 9349 or Rule 9351. Such an expulsion waits for SEC review to finish, whereas a cease and desist order is in effect throughout it.

Eligibility proceedings have the same shape. FINRA Rule 9527 uses the same Section 19 sentence as FINRA Rule 9870 and provides that the filing of an application for review "shall not stay the effectiveness of final action by FINRA, unless the SEC otherwise orders". It then provides that a decision to deny an application for a disqualified member's continued membership shall not become effective until the time for filing an application for review with the SEC has expired and no application is filed or, if one is timely filed, until the SEC completes its review. FINRA Rule 9870 has no such exception for either kind of cease and desist order.

Effectiveness in the ordinary disciplinary track also differs before any application is made. Under FINRA Rule 9268(f), unless the majority decision provides otherwise, a sanction other than a bar or an expulsion in a decision constituting final disciplinary action becomes effective "on a date to be determined by FINRA", and a bar or an expulsion becomes effective immediately upon the decision becoming final. A Hearing Panel decision becomes final disciplinary action only if it is not timely appealed under FINRA Rule 9311 or called for review under FINRA Rule 9312. A suspension imposed by a Hearing Panel therefore waits for finality and then for a date FINRA sets, while a temporary cease and desist order is in effect as soon as its service is complete.

Examination Relevance and Key Takeaways

FINRA Rule 9870 is tested on the Series 7 and Series 24 examinations as the SEC review rule for cease and desist proceedings — the final rule completing the Rule 9800 series and establishing the external appellate pathway.

The key points to retain are these: temporary and permanent cease and desist orders issued under the Rule 9800 series constitute final and immediately effective disciplinary sanctions imposed by FINRA — they require no further internal FINRA review to become final FINRA action; the right to SEC review of any action under the Rule 9800 series is governed by Exchange Act Section 19 — the same statutory framework as FINRA Rules 9370, 9527, and 9770; the filing of an SEC review application does not stay the effectiveness of a TCDO or PCDO by default — a stay requires the SEC itself to order it, and neither FINRA nor the respondent unilaterally controls this determination; this non-stay default mirrors FINRA Rule 9850's non-stay default for internal review applications, creating a consistent two-layer framework in which cease and desist orders remain operative throughout both internal and external review unless the relevant decision-maker affirmatively orders otherwise; FINRA Rule 9870 completes the Rule 9800 series' end-to-end framework running from FINRA Rule 9810's initiation through FINRA Rule 9860's violation enforcement; and the rule was last amended December 15, 2016 through SR-FINRA-2016-043, with no subsequent amendments confirmed, and three selected notices are associated — 03-35, 08-57, and 17-22.