September 25, 2022

Volume XII, Number 268


September 23, 2022

Subscribe to Latest Legal News and Analysis

September 22, 2022

Subscribe to Latest Legal News and Analysis

FINRA Requests Comment on Proposed Proceeding Rule for Failures to Comply With Qualification Examinations Rules of Conduct, Registration Requirements and Eligibility Proceedings Rules

On September 22, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 20-33 that requested comment on (1) proposed formal procedures to bring actions against non-associated persons who cheat or misbehave during a FINRA qualification examination and (2) related amendments to FINRA’s registration requirements rule and eligibility proceedings rules.

Currently, FINRA cannot bring a disciplinary action against a person who engages in misconduct before associating with a firm. To help address this problem, amended FINRA Rule 1210.05 would enable FINRA to determine whether a non-associated person has cheated on the Securities Industry Essentials (SIE) examination and, if so, forfeit the examination results, prohibit retakes of the SIE examination, or both. In connection with the above, FINRA proposes the following:

  • adopting a new expedited proceeding rule with new FINRA Rule 9560 (Failure to Comply with the FINRA Qualification Examinations Rules of Conduct) and make corresponding amendments to FINRA Rule 9559 (Hearing Procedures for Expedited Proceedings Under the Rule 9550 Series);

  • amending FINRA Rule 1210.05 to permit FINRA to take action against non-associated persons for a broader range of violations of the Rules of Conduct (not just cheating), prohibit them from taking any FINRA qualification examination (not just the SIE examination) and to establish a qualification requirement that applies to persons who are prohibited from taking any FINRA qualification examination; and

  • amending FINRA Rule 9520 Series (Eligibility Proceedings) to address requests by associated persons and non-associated persons for relief from the proposed Rule 1210.05 qualification requirements.

FINRA encourages all interested parties to comment. Comments must be received by November 23. The Notice is available here.

©2022 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 276

About this Author

Susan Light, Katten Law Firm, Finance Law Attorney, New York

Susan Light focuses her practice on financial services regulatory matters. She counsels broker-dealers, hedge funds, investment banks and financial services clients on enforcement issues involving the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), other self-regulatory organizations (SROs) and state and federal regulatory authorities. She has particular experience related to sales practice issues, financial and operational issues, anti-money laundering, crowdfunding, cybersecurity, and cryptocurrencies.

Michael T. Foley, Katten, Lawyer, Finance, FINRA, Chicago
Special Counsel

Michael Foley represents broker-dealers, investment advisers and other financial services industry participants with respect to a broad spectrum of legal and regulatory matters arising under the federal securities laws.

Michael has nearly 20 years of experience in private practice and in-house at both a large, full-service broker-dealer and at an online discount broker-dealer, advising broker-dealers and other financial institutions regarding compliance with the federal securities and commodities laws, and with the regulations of the US Securities and Exchange...


Adam Haft is an associate in the Financial Services practice.

Bar Admissions

New York