SIE practice questionhardCode of Procedure
Under FINRA's Code of Procedure, which of the following best describes the process for bringing a disciplinary action against a member firm or associated person?
- AThe SEC files a complaint directly in federal court against the individual
- BFINRA files a complaint, the respondent files an answer, a hearing is conducted before a hearing panel, and the panel issues a decision✓ Correct answer
- CThe firm's compliance officer unilaterally decides the outcome of the case
- DThe customer files a lawsuit, and FINRA acts as the judge
Explanation
Why B — FINRA files a complaint, the respondent files an answer, a hearing is conducted before a hearing panel, and the panel issues a decision
FINRA's Code of Procedure (Rule 9000 Series) governs disciplinary proceedings. The Department of Enforcement files a formal complaint, the respondent has 25 days to file an answer, and a hearing is conducted before a FINRA hearing panel. The panel issues a written decision that may include sanctions such as fines, suspensions, or bars. The decision can be appealed to FINRA's National Adjudicatory Council (NAC) and ultimately to the SEC. This is an administrative process, not a court proceeding.
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