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Law360 (June 12, 2020, 2:51 PM EDT) -- The Financial Industry Regulatory Authority has issued a new rule allowing staff to continue serving documents electronically and giving oral arguments via videoconference — while upholding various COVID-19-related deadline extensions — until July 31 "in order to cope with the current pandemic conditions."
The new rule extends a May 8 measure that allows FINRA staff to serve and receive documents via email and conduct oral arguments before its National Adjudicatory Council through video, and gives both staff and applicants additional time to meet membership and disciplinary appeals deadlines, according to Wednesday's rule filed with the U.S. Securities and Exchange Commission.
The new rule will continue to "allow FINRA to maintain fair processes and protect investors while operating in a remote work environment ... in order to cope with the current pandemic conditions," extending the temporary amendments to July 31 from the June 15 date indicated in the original May 8 rule, FINRA said.
"The need for FINRA staff, with limited exceptions, to work remotely and restrict in-person activities — consistent with the recommendations of public health officials — makes it challenging to meet certain procedural requirements and perform certain functions required under FINRA rules," according to the rule, which noted that it provides FINRA with "needed flexibility for its operations during the COVID-19 outbreak."
"With few exceptions," FINRA's procedures did not previously provide for email service, and continued hard copy service could lead to "significant delays in FINRA proceedings," the rule said.
It added that continuing to allow oral arguments by videoconference "is a reasonable accommodation to protect the health and safety of all parties participating ... while avoiding unnecessary delays."
The rule also extends through July 31 various membership, disciplinary and securities-related appeals and review deadline extensions that the May rule had put in place.
While existing regulations require that an appeal hearing requested by an applicant seeking FINRA membership be held within 45 days of the request, the temporary measures bump this to 135 days.
The relief also gives the subcommittee of the National Adjudicatory Council — the FINRA committee that reviews initial decisions tied to disciplinary and membership proceedings — 150 days instead of 60 days after a hearing to recommend a decision in writing to the NAC.
In addition, the subcommittee has 70 days instead of 40 days to begin reviewing a so-called call for review from FINRA's Office of Hearing Officers — a body of "impartial adjudicators" who examine disciplinary cases brought by the regulator's enforcement division — and 90 days from the call for review instead of 60 days to provide its recommendation to the NAC.
Lastly, in cases where FINRA has denied corporate actions relating to publicly traded securities, the temporary rule bumps the seven-day appeal deadline to 30 days on the part of the applicant, while allowing FINRA to review batches of such appeals every 90 days instead of monthly.
--Editing by Abbie Sarfo.
For a reprint of this article, please contact reprints@law360.com.
