Notice2025-10979
Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Stay the Effectiveness of Specified Expulsions and FINRA Actions
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 17, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 90 Issue 115 (Tuesday, June 17, 2025)</title>
</head>
<body><pre>
[Federal Register Volume 90, Number 115 (Tuesday, June 17, 2025)]
[Notices]
[Pages 25689-25693]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-10979]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103228; File No. SR-FINRA-2025-004]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Stay the Effectiveness of Specified Expulsions
and FINRA Actions
June 11, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on June 2, 2025, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by FINRA. FINRA has designated
the proposed rule change as constituting a ``non-controversial'' rule
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which
renders the proposal effective upon receipt of this filing by the
Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to stay the effectiveness of specified
expulsions of member firms, cancellations of membership, and denials of
applications for continued membership of disqualified member firms to
allow for SEC review. The proposed rule change would amend FINRA Rule
8320 (Payment of Fines, Other Monetary Sanctions, or Costs; Summary
Action for Failure to Pay), the FINRA Rule 9000 Series (Code of
Procedure), and Funding Portal Rule 900(b) (Eligibility Proceedings).
The text of the proposed rule change is available on FINRA's
website at <a href="http://www.finra.org">http://www.finra.org</a>, at the principal office of FINRA and
at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Overview of Proposed Amendments
FINRA is proposing to amend FINRA rules to provide that specified
expulsions of member firms, cancellations of membership, and denials of
applications for continued membership of disqualified member firms
shall not become effective until the time for filing an application for
review with the SEC has expired \4\ 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.\5\ The proposed rule change would
apply to decisions issued in expedited proceedings under the FINRA Rule
9550 Series, disciplinary proceedings under the FINRA Rule 9300 Series,
and eligibility proceedings under the FINRA Rule 9520 Series and
Funding Portal Rule 900(b), as well as expulsions of member firms under
FINRA Rule 8320.\6\
---------------------------------------------------------------------------
\4\ Pursuant to the Exchange Act, an application for review of a
determination by FINRA, such as the imposition of a final
disciplinary sanction or denial of membership, must be filed with
the SEC within 30 days after notice is filed with the SEC and
received by the aggrieved person applying for review. See 15 U.S.C.
78s(d). See also SEC Rule of Practice 420(b), 17 CFR 201.420(b)
(providing that the SEC will not extend this 30-day period absent a
showing of extraordinary circumstances).
\5\ See, e.g., Exchange Act Sections 19(e) and (f), 15 U.S.C.
78s(e) and (f).
\6\ FINRA notes that the proposed rule change would not apply to
any other sanction or FINRA action against a member firm, associated
person, or other person subject to FINRA's jurisdiction.
---------------------------------------------------------------------------
The proposed rule change would align FINRA rules relating to the
[[Page 25690]]
effectiveness of expulsions in expedited proceedings with the ruling of
the United States Court of Appeals for the D.C. Circuit (``D.C.
Circuit'') in Alpine Securities Corp. v. FINRA (the ``Alpine
Preliminary Injunction Decision'').\7\ In the Alpine Preliminary
Injunction Decision, the D.C. Circuit remanded the case to the district
court with instructions to enter a limited preliminary injunction
enjoining FINRA from expelling Alpine until the SEC has reviewed any
expulsion that FINRA may order in the pending expedited proceeding
against Alpine or the time for Alpine to seek SEC review of an
expulsion has passed.
---------------------------------------------------------------------------
\7\ See Alpine Securities Corp. v. Fin. Indus. Regul. Auth., 121
F.4th 1314 (D.C. Cir. 2024), cert. denied (June 2, 2025) (No. 24-
904). FINRA notes that this litigation is ongoing and FINRA does not
waive any rights or arguments it may have in connection with this or
any other pending or future matter.
---------------------------------------------------------------------------
FINRA is also proposing to stay the effectiveness of other FINRA
actions against member firms that may result in a sanction or action
that shares the relevant characteristics of the sanction at issue in
the Alpine Preliminary Injunction Decision, specifically expulsions
imposed in full disciplinary proceedings and under FINRA Rule 8320 (for
failure to pay fines, monetary sanctions, and costs), cancellations of
membership, and denials of applications for continued membership. Like
expulsions in expedited proceedings, these latter FINRA actions are not
currently stayed under FINRA rules by the filing of an application for
SEC review, and once the FINRA action becomes final and effective, the
firm is no longer a FINRA member.\8\ FINRA notes that the D.C. Circuit
in the Alpine Preliminary Injunction Decision distinguished the impact
of expulsions and loss of FINRA membership from other types of
sanctions under FINRA rules.\9\
---------------------------------------------------------------------------
\8\ However, unlike an expulsion, if a member firm's membership
has been cancelled, the firm can reapply for FINRA membership by
submitting a new Form BD and Form NMA as part of the new member
application process. See, e.g., Bylaws of the Corporation, Article
VI, Sec. 4.
\9\ See supra note 7, 121 F.4th 1314, 1330-31, and 1331 n.3.
---------------------------------------------------------------------------
The specific proposed amendments to align FINRA rules relating to
expulsions in expedited proceedings, and other FINRA actions against
member firms that may result in a sanction or action that shares the
relevant characteristics of such expulsions, with the Alpine
Preliminary Injunction Decision are discussed in greater detail
below.\10\
---------------------------------------------------------------------------
\10\ FINRA notes that the proposed rule change would impact all
members, including members that are funding portals or have elected
to be treated as capital acquisition brokers (``CABs''), given that
the funding portal and CAB rule sets incorporate the impacted FINRA
rules by reference. However, as discussed herein, Funding Portal
Rule 900(b) sets forth separate rules governing eligibility
proceedings for funding portal members and certain provisions of
that Rule will be amended pursuant to the proposed rule change.
---------------------------------------------------------------------------
Expedited Proceedings
Member firms may face expulsions and cancellations of membership in
expedited proceedings under the FINRA Rule 9550 Series. At issue in the
Alpine Preliminary Injunction Decision was FINRA's expedited proceeding
to expel Alpine from membership for failing to comply with a ``cease
and desist'' order that FINRA had previously issued against Alpine for
violation of FINRA rules. In addition to situations involving a failure
to comply with temporary or permanent cease and desist orders, FINRA
may bring an expedited proceeding against a member firm for, among
other grounds, failure to provide or keep information current; failure
to pay FINRA dues, fees, and other charges; and failure to comply with
an arbitration award or related settlement. Most of the rules governing
expedited proceedings expressly provide for the potential cancellation
of membership following notice to the member firm.\11\
---------------------------------------------------------------------------
\11\ The rules that expressly provide for a cancellation of
membership are: FINRA Rules 9553 (Failure to Pay FINRA Dues, Fees
and Other Charges), 9554 (Failure to Comply with an Arbitration
Award or Related Settlement or an Order of Restitution or Settlement
Providing for Restitution), 9555 (Failure to Meet the Eligibility or
Qualification Standards or Prerequisites for Access to Services),
9556 (Failure to Comply with Temporary and Permanent Cease and
Desist Orders, or Orders that Impose Conditions or Restrictions),
and 9561 (Procedures for Regulating Activities Under Rule 4111).
---------------------------------------------------------------------------
Generally, to initiate an expedited proceeding under the FINRA Rule
9550 Series, FINRA issues a notice stating that the member firm will be
subject to specified requirements, conditions, or sanctions (which, as
relevant here, may include a cancellation of membership), unless the
respondent member firm undertakes the action specified in the notice
(e.g., complies with a cease and desist order) or requests a hearing
with FINRA's Office of Hearing Officers. If the member firm receives
notice of cancellation of membership, a timely request for a hearing
will automatically stay the cancellation pursuant to FINRA Rule
9559(c). If the member firm fails to take the action specified in the
notice, or to submit a timely request for a hearing, the cancellation
will be effective within seven to twenty-one days following service of
the notice, depending on the rule pursuant to which the expedited
proceeding has been brought.\12\
---------------------------------------------------------------------------
\12\ See FINRA Rules 9553(d), 9554(d), 9555(d), 9556(d), and
9561(b)(4).
---------------------------------------------------------------------------
FINRA Rule 9559 sets forth the hearing procedures for expedited
proceedings under the FINRA Rule 9550 Series, including, among others,
the appointment of a Hearing Officer or Hearing Panel, time and notice
of hearing, and the timing of the decision. FINRA Rule 9559(n) provides
that the Hearing Officer or Panel is authorized to approve, modify, or
withdraw any sanction imposed in the notice, including a cancellation
of membership, and with limited exceptions, may impose any other
fitting sanction pursuant to FINRA Rule 8310(a). Such sanction could
include expulsion of the member firm.\13\
---------------------------------------------------------------------------
\13\ See supra note 8 regarding expulsions and cancellations of
membership.
---------------------------------------------------------------------------
FINRA Rule 9559(p) sets forth the requirements for the contents of
the decision of the Hearing Officer or Panel, and pursuant to
subparagraph (6), the decision must include the date on which any
sanction will be effective, if it is not already effective.\14\ FINRA
is proposing to amend FINRA Rule 9559(p)(6) to provide that an
expulsion or cancellation of membership in an expedited proceeding
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.
---------------------------------------------------------------------------
\14\ Unlike in a disciplinary proceeding, a respondent does not
have a right to appeal a decision issued by a Hearing Officer or
Panel in an expedited proceeding under the FINRA Rule 9550 Series to
the National Adjudicatory Council (``NAC''). See infra note 16.
However, pursuant to FINRA Rule 9559(q), the NAC's Review
Subcommittee may call a proposed decision for review. If the NAC's
Review Subcommittee does not call the proposed decision for review,
the decision of the Hearing Officer or Panel is considered final
FINRA action.
---------------------------------------------------------------------------
In addition, FINRA Rule 9559(r) currently provides that the filing
of an application for review by the SEC does not stay the effectiveness
of a final FINRA action in an expedited proceeding under the FINRA Rule
9550 Series, unless the SEC otherwise orders. FINRA is proposing to
amend this provision to provide that, pursuant to amended FINRA Rule
9559(p)(6), an expulsion or cancellation of membership in an expedited
proceeding 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.
[[Page 25691]]
Disciplinary Proceedings
FINRA rules generally provide that sanctions imposed in
disciplinary proceedings under the FINRA Rule 9200 Series will be
effective on a date prescribed by a Hearing Panel. Unless otherwise
provided in the decision, the expulsion of a member firm is effective
immediately upon the written decision of the Hearing Panel (or Hearing
Officer, in the case of a default decision) becoming the final
disciplinary action of FINRA,\15\ i.e., if the decision is not timely
appealed to or called for review by the National Adjudicatory Council
(``NAC'').\16\
---------------------------------------------------------------------------
\15\ See FINRA Rules 9268(f) and 9269(d).
\16\ The NAC is FINRA's appellate body and presides primarily
over disciplinary matters that have been appealed to or called for
review by the NAC pursuant to the FINRA Rule 9300 Series and
statutory disqualification proceedings pursuant to the FINRA Rule
9520 Series. For most matters the NAC considers, its written
decision becomes final FINRA action if the FINRA Board does not call
the proposed decision for review pursuant to FINRA Rule 9351. With
respect to expedited proceedings, the NAC's Review Subcommittee may
call for review by the NAC a proposed decision prepared by a Hearing
Officer or Panel; the FINRA Board does not have discretion to call
the NAC's decision for review under FINRA rules.
---------------------------------------------------------------------------
A member firm seeking review of an expulsion imposed in a decision
under the FINRA Rule 9200 Series must appeal to the NAC in the first
instance and not directly to the SEC.\17\ If affirmed on review by the
NAC or the FINRA Board (``Board''),\18\ the expulsion is effective upon
service of the decision of the NAC or Board, as applicable, unless
otherwise provided in the decision, pursuant to current FINRA Rule
9360.
---------------------------------------------------------------------------
\17\ See generally FINRA Rule 9300 Series (Review of
Disciplinary Decision by National Adjudicatory Council and FINRA
Board; Application for SEC Review). See also, e.g., Edward J.
Jakubik, Jr., Exchange Act Release No. 61541, 2010 SEC LEXIS 1014,
*13 (Feb. 18, 2010) (dismissing appeal and holding that applicant
``failed to exhaust his administrative remedies by appealing to the
NAC, as required by NASD's rules. We have repeatedly held that the
Commission will not consider an application for review if the
applicant failed to follow NASD procedures.'') (internal citations
omitted).
\18\ Pursuant to FINRA Rule 9351, the Board has the discretion
to call a disciplinary proceeding for review after receiving the
proposed written decision of the NAC.
---------------------------------------------------------------------------
FINRA is proposing to amend FINRA Rule 9360 to provide that an
expulsion of a member firm imposed by the NAC or Board in a
disciplinary proceeding 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.
In addition, FINRA Rule 9370 currently provides that the filing of
an application for review by the SEC stays the effectiveness of any
sanction, other than a bar or expulsion, imposed in a decision
constituting final disciplinary action of FINRA for purposes of SEA
Rule 19d-1(c)(1). FINRA is proposing to amend this Rule to provide
that, pursuant to amended FINRA Rule 9360, an expulsion in a decision
issued under FINRA Rule 9349 (by the NAC) or FINRA Rule 9351 (by the
Board) 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.\19\
---------------------------------------------------------------------------
\19\ Pursuant to the proposed rule change, FINRA Rule 9370 also
would expressly state that the filing of an application for review
by the SEC shall not stay the effectiveness of an expulsion imposed
in a decision constituting final disciplinary action of FINRA under
FINRA Rule 9268 or Rule 9269, as is the case today. The proposed
rule change does not operate as a stay where a member firm has
defaulted (i.e., has not availed itself of the opportunity for a
hearing before FINRA adjudicators or taken other interim actions
available under FINRA rules to avert a sanction), or has failed to
exhaust its administrative remedies through FINRA's appellate
process (see supra notes 16 and 17 and accompanying text). However,
if an expulsion in a decision under FINRA Rule 9268 or Rule 9269 is
appealed to or called for review by the NAC, the decision will be
stayed until the NAC issues a decision or, in cases called for
discretionary review by the Board, until the Board issues a
decision. See FINRA Rules 9311(b) and 9312(b). If the NAC or Board
subsequently affirms the expulsion, the effectiveness of such
expulsion would be stayed pursuant to amended FINRA Rule 9360.
---------------------------------------------------------------------------
FINRA is also proposing a conforming change to FINRA Rule 9370 to
replace the current language, which provides that a respondent ``may
apply'' for SEC review of any action taken pursuant to the FINRA Rule
9200 Series or FINRA Rule 9300 Series, with language stating that such
review ``is governed'' by Section 19 of the Exchange Act. This proposed
amendment would achieve consistency with other provisions of FINRA's
Code of Procedure addressing SEC review of final FINRA actions and
mirrors the language of, for example, FINRA Rule 9559(r), discussed
above, and FINRA Rule 9870 relating to cease and desist orders issued
under the FINRA Rule 9800 Series.
Eligibility Proceedings
Under FINRA Rules, if a disqualified member firm fails to request
relief within 10 days of receiving notice of disqualification, its
membership will be cancelled, unless FINRA staff grants an extension
for good cause shown.\20\ A disqualified member firm may apply for
continued membership under the FINRA Rule 9520 Series. Pursuant to
FINRA Rule 9524, if FINRA staff recommends denial of the application,
the member firm may request a hearing before the NAC. A hearing panel
of the NAC conducts a hearing and prepares a proposed written decision
for review by the NAC's Statutory Disqualification Committee.\21\ After
review by the Statutory Disqualification Committee, the NAC reviews the
proposed decision and provides a proposed written decision to the
Board.\22\ After receipt of the NAC's proposed written decision, the
Board has discretion to call the proceeding for review pursuant to
FINRA Rule 9525.
---------------------------------------------------------------------------
\20\ See, e.g., FINRA Rule 9522(a)(2).
\21\ See FINRA Rules 9524(a)(1), (a)(10).
\22\ See FINRA Rule 9524(b).
---------------------------------------------------------------------------
The denial by the NAC or Board of an application for continued
membership is immediately effective, pursuant to FINRA Rules 9524(b)(3)
and 9525(e), respectively. The Funding Portal rules, which generally
provide that funding portal members are otherwise subject to the FINRA
Code of Procedure, contain provisions governing eligibility proceedings
that are comparable to FINRA Rules 9524(b)(3) and 9525(e).\23\
---------------------------------------------------------------------------
\23\ See Funding Portal Rules 900(b)(12)(M) and 900(b)(13)(E),
respectively.
---------------------------------------------------------------------------
FINRA is proposing to amend FINRA Rules 9524(b)(3) and 9525(e), and
Funding Portal Rules 900(b)(12)(M) and 900(b)(13)(E) to provide that a
decision to deny an application for continued membership of a
disqualified member firm or a disqualified funding portal member, as
applicable, 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. The proposed rule
change also would update the language of the FINRA and Funding Portal
rules by replacing references to ``re-entry,'' a term that is no longer
in use, with the more precise and descriptive phrase, ``application for
a disqualified member's continued membership'' and ``application for a
disqualified funding portal member's continued membership,''
respectively. Finally, pursuant to the proposed rule change, these
rules would expressly state that a decision to deny any other
application under the FINRA Rule 9520 Series and Funding Portal Rule
900(b), e.g., an application for continued association of a
disqualified person, shall be effective immediately, as is the case
today.
[[Page 25692]]
In addition, FINRA Rule 9527 and Funding Portal Rule 900(b)(14)
currently provide that the filing of an application for review by the
SEC does not stay the effectiveness of final action by FINRA in an
eligibility proceeding under the FINRA Rule 9520 Series and Funding
Portal Rule 900(b), respectively, unless the SEC otherwise orders.
FINRA is proposing to amend FINRA Rule 9527 to provide that, pursuant
to amended FINRA Rules 9524(b)(3) and 9525(e), a decision to deny an
application for a disqualified member firm's continued membership 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. Similarly, FINRA is proposing to amend
Funding Portal Rule 900(b)(14) to include a cross-reference to amended
Funding Portal Rules 900(b)(12)(M) and 900(b)(13)(E) and to make
identical amendments regarding the effectiveness of a denial of an
application for a disqualified funding portal member's continued
membership.
FINRA Rule 8320
A member firm can be expelled outside of a disciplinary proceeding
or expedited proceeding pursuant to FINRA Rule 8320. Specifically,
FINRA Rule 8320(b) provides that after seven days' written notice,
FINRA may summarily suspend or expel from membership a member firm that
fails to (1) pay promptly a fine or other monetary sanction imposed
pursuant to FINRA Rule 8310, or cost imposed pursuant to FINRA Rule
8330 when such fine, monetary sanction, or cost becomes finally due and
payable; or (2) terminate immediately the association of a person who
fails to pay promptly a fine or other monetary sanction imposed
pursuant to FINRA Rule 8310, or cost imposed pursuant to FINRA Rule
8330 when such fine, monetary sanction, or cost becomes finally due and
payable.
FINRA is proposing to amend FINRA Rule 8320 by renumbering the text
of current paragraph (b) as paragraph (b)(1), and renumbering current
paragraphs (b)(1) and (b)(2) as (b)(1)(A) and (b)(1)(B), respectively.
FINRA also proposes to adopt new paragraph (b)(2) to provide that an
expulsion of a member firm under paragraph (b)(1) 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 notes that the proposed rule change affects a small number of
cases. A review of FINRA records from January 2020 through March 31,
2025, found a total of nine adjudicated decisions resulting in an
expulsion or cancellation of membership--two were in disciplinary
proceedings and not appealed to the NAC; three were in expedited
proceedings; and four were issued by the NAC in appeals of disciplinary
decisions. As of the end of the review period, four of the nine
decisions had been appealed to the SEC, three of which appeals were
unsuccessful, and one remains pending. In addition, there were two
expulsions pursuant to FINRA Rule 8320 during the review period,
neither of which was appealed to the SEC. Between 2020 and 2024 (the
last full year of data), the adjudicated decisions resulting in
expulsions and cancellations of membership represented an average of
12% of all expulsions and cancellations. On an annual basis, the number
of impacted member firms represented, on average, 0.6% of FINRA
membership. FINRA notes that there were no denials of applications for
continued membership of disqualified member firms within the five-year
review period.
FINRA believes that any potential risk to investor protection posed
by aligning FINRA rules with the Alpine Preliminary Injunction
Decision, as described above, could be mitigated by several factors. In
cases where an expulsion, cancellation of membership, or denial of an
application for continued membership has been appealed to the SEC,
FINRA will seek expeditious resolution by the SEC. And, where
appropriate, FINRA may take additional steps to provide interim
customer protections during the pendency of an appeal of a disciplinary
decision imposing an expulsion or cancellation of membership. Pursuant
to FINRA Rule 9285, in a disciplinary proceeding appealed to or called
for review by the NAC, a Hearing Officer is authorized to impose any
conditions or restrictions on the activities of a respondent member
firm that the Hearing Officer considers reasonably necessary for the
purpose of preventing customer harm. Such conditions or restrictions
would target the misconduct at issue in the disciplinary proceeding and
deter the member firm from engaging in further misconduct. The
conditions or restrictions would remain in place until FINRA's final
decision takes effect and all appeals, including an appeal to the SEC,
are exhausted. Finally, FINRA notes that information about disciplinary
proceedings and sanctions against member firms is available through
FINRA's BrokerCheck.\24\ Accordingly, investors would be able to obtain
information regarding whether a member firm is subject to any adverse
regulatory action that is the subject of a pending application for SEC
review.\25\
---------------------------------------------------------------------------
\24\ BrokerCheck provides the public with information on the
professional background, business practices, and conduct of member
firms and their associated persons. The information that FINRA
releases to the public through BrokerCheck is derived from the
Central Registration Depository (``CRD'') system, the securities
industry online registration and licensing database. Member firms,
their associated persons, and regulators report information to the
CRD system via the uniform registration forms. See <a href="https://brokercheck.finra.org/">https://brokercheck.finra.org/</a>.
\25\ See FINRA Rule 8313(d), which provides that FINRA shall
provide notice to the public if a disciplinary decision of FINRA is
appealed to the SEC, and the notice shall state whether the
effectiveness of the decision has been stayed pending the outcome of
proceedings before the SEC.
---------------------------------------------------------------------------
FINRA has filed the proposed rule change for immediate
effectiveness and has requested that the SEC waive the requirement that
the proposed rule change not become operative for 30 days after the
date of the filing, so FINRA can implement the proposed rule change on
the date of filing.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\26\ which requires, among
other things, that FINRA rules be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest; and Section 15A(b)(8) of the Act,\27\ which requires
that FINRA rules provide a fair procedure for, among other things, the
disciplining of members and persons associated with members.
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78o-3(b)(6).
\27\ 15 U.S.C. 78o-3(b)(8).
---------------------------------------------------------------------------
FINRA believes that the proposed rule change aligns FINRA rules
relating to the effectiveness of member firm expulsions in expedited
proceedings, and other FINRA actions against member firms that may
result in a sanction or action that shares the relevant characteristics
of such expulsions, with the D.C. Circuit's ruling in the Alpine
Preliminary Injunction Decision. In addition, FINRA believes that any
potential risk to investor protection posed by this alignment could be
mitigated by the factors discussed above. Finally, FINRA believes that
the proposed rule change will provide member firms and interested
parties notice and clarity
[[Page 25693]]
regarding the effectiveness of expulsions, cancellations of membership,
and denials of applications for continued membership under FINRA rules.
Accordingly, FINRA believes that the proposed rule change will enable
FINRA to continue to administer a fair procedure for disciplining
member firms while meeting its investor protection goals.
B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule change will
ensure that FINRA rules relating to the effectiveness of expulsions in
expedited proceedings, and other FINRA actions against member firms
that may result in a sanction or action that shares the relevant
characteristics of such expulsions, are aligned with the D.C. Circuit's
ruling in the Alpine Preliminary Injunction Decision. In so doing,
FINRA is not imposing new or additional costs or impacts on member
firms or investors. Thus, the proposed rule change will allow FINRA to
conduct disciplinary proceedings and meet its investor protection goals
in a manner that is consistent with the Exchange Act and aligns with
the Alpine Preliminary Injunction Decision.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \28\ and Rule 19b-
4(f)(6) thereunder.\29\
---------------------------------------------------------------------------
\28\ 15 U.S.C. 78s(b)(3)(A).
\29\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative prior to 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\30\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. FINRA has requested
that the Commission waive the 30-day operative delay requirement so
that the proposed rule change may become operative on June 2, 2025. In
support of its request, FINRA states that implementation of the
proposed rule change on the date of filing will help ensure that FINRA
rules relating to the effectiveness of expulsions in expedited
proceedings, and other FINRA actions against member firms that may
result in a sanction or action that shares the relevant characteristics
of such expulsions, are aligned with the D.C. Circuit's ruling in the
Alpine Preliminary Injunction Decision and provide member firms and
interested parties notice and clarity regarding the effectiveness of
expulsions, cancellations of membership, and denials of applications
for continued membership under FINRA rules. For these reasons, the
Commission believes that waiver of the 30-day operative delay for this
proposed rule change is consistent with the protection of investors and
the public interest. Accordingly, the Commission hereby waives the 30-
day operative delay and designates the proposed rule change operative
upon filing.\31\
---------------------------------------------------------------------------
\30\ 17 CFR 240.19b-4(f)(6)(iii).
\31\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#1664637a733b75797b7b737862655665737538717960"><span class="__cf_email__" data-cfemail="2c5e594049014f4341414942585f6c5f494f024b435a">[email protected]</span></a>. Please include
File Number SR-FINRA-2025-004 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2025-004. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10 a.m. and 3
p.m. Copies of such filing also will be available for inspection and
copying at the principal office of FINRA. Do not include personal
identifiable information in submissions; you should submit only
information that you wish to make available publicly. We may redact in
part or withhold entirely from publication submitted material that is
obscene or subject to copyright protection. All submissions should
refer to File Number SR-FINRA-2025-004 and should be submitted on or
before July 8, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
---------------------------------------------------------------------------
\32\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-10979 Filed 6-16-25; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on June 17, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.