[Federal Register Volume 85, Number 94 (Thursday, May 14, 2020)]
[Notices]
[Pages 29005-29009]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10285]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88839; File No. SR-FINRA-2020-014]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend FINRA Rule 9231 To Provide for the 
Compensation of All Panelists That Serve in Connection With a FINRA 
Disciplinary Hearing

May 8, 2020.
    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 May 5, 2020, 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, 
II, and III 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). Rule 19b-4(f)(6) requires a self-
regulatory organization to give the Commission written notice of its 
intent to file the proposed rule change at least five business days 
prior to the date of filing of the proposed rule change, or such 
shorter time as designated by the Commission. FINRA has satisfied 
this requirement.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to amend FINRA Rule 9231 to provide for the 
compensation of all panelists that serve in connection with a FINRA 
disciplinary hearing, regardless of whether it is an Extended or non-
Extended Hearing.\4\
---------------------------------------------------------------------------

    \4\ FINRA Rule 9231(c) sets forth the circumstances in which a 
hearing may be designated an Extended Hearing. Matters that require 
an Extended Hearing are assigned an Extended Hearing Panel. For the 
purposes of this proposal only, the term ``Hearing Panel'' 
collectively refers to both Extended and non-Extended Hearing 
Panels.
---------------------------------------------------------------------------

    The text of the proposed rule change is available on FINRA's 
website at http://www.finra.org, 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
    FINRA Rule 9231 governs the appointment by FINRA's Chief Hearing 
Officer of Hearing Panels, both Extended and non-Extended, and 
replacement Hearing Officers.
    A Hearing Panel consists of a Hearing Officer and two Panelists.\5\ 
Each Panelist must be associated with a FINRA member or retired 
therefrom.\6\ Service as a Panelist is voluntary.
---------------------------------------------------------------------------

    \5\ See FINRA Rule 9231(b) and (c). If, after appointment, a 
Panelist withdraws, is unable to serve, or is disqualified, the 
Chief Hearing Officer may, in his or her discretion, determine 
whether to appoint a replacement Panelist. If two Panelists 
withdraw, are unable to serve, or are disqualified, the Chief 
Hearing Officer must appoint two replacement Panelists. See FINRA 
Rule 9234.
    \6\ See FINRA Rule 9231(b) and (c).
---------------------------------------------------------------------------

    Rule 9231 authorizes the Chief Hearing Officer to exercise his or 
her discretion to compensate Panelists who serve on Extended Hearing 
Panels only. The proposed rule change would amend Rule 9231 to provide 
for the compensation of all Panelists, irrespective of whether they 
serve on Extended or non-Extended Hearing Panels, and without the 
exercise of discretion by the Chief Hearing Officer. FINRA believes the 
proposed rule change will encourage a greater and more diverse pool of 
eligible individuals

[[Page 29006]]

to agree to serve on Hearing Panels. A larger and more diverse pool of 
eligible individuals willing to serve as Panelists will facilitate the 
Chief Hearing Officer's ability readily to appoint Hearing Panels with 
appropriate experience and expertise as needed.
Background
    FINRA's disciplinary process begins with the Department of 
Enforcement filing a complaint with the Office of Hearing Officers 
(``OHO'') alleging that a Respondent \7\ is violating or has violated a 
rule, regulation, or statutory provision, including the federal 
securities laws and related regulations, that FINRA has jurisdiction to 
enforce.\8\ Following the filing of a complaint, the Chief Hearing 
Officer assigns a Hearing Officer to preside over the disciplinary 
proceeding \9\ and appoints Panelists to an Extended or non-Extended 
Hearing Panel to conduct the disciplinary proceeding. Disciplinary 
matters are assigned to an Extended Hearing Panel if, upon 
consideration of the complexity of the issues involved, the probable 
length of the hearing, or other factors that the Chief Hearing Officer 
deems material, the Chief Hearing Officer determines that a matter 
shall be an Extended Hearing.\10\
---------------------------------------------------------------------------

    \7\ A Respondent is a FINRA member or associated person against 
whom a complaint is filed. See FINRA Rule 9120(aa).
    \8\ See FINRA Rule 9211.
    \9\ See FINRA Rule 9213. A Hearing Officer must be an attorney 
who is an employee of FINRA or former employee of FINRA who 
previously acted as a Hearing Officer. See FINRA Rule 9120(r). Among 
other things, a Hearing Officer administers pre-hearing matters, 
including most motions, resolves procedural and evidentiary matters, 
oversees the settlement and discovery process, regulates the course 
of the proceeding, and drafts a decision that represents the view of 
the majority of the Hearing Panel. See FINRA Rule 9235.
    \10\ See FINRA Rule 9231(c). Rule 9231 does not establish a 
minimum number of hearing days required to make a hearing an 
Extended Hearing. OHO's policy is to treat any hearing scheduled to 
last five or more days as an Extended Hearing.
---------------------------------------------------------------------------

Responsibilities of Hearing Panelists; Criteria for Appointment
    Panelists are essential to FINRA's disciplinary process. The 
Hearing Panel listens to the presentation of evidence and issues a 
written decision setting forth findings as to whether a Respondent 
engaged in violative conduct and describing the sanctions, if any, 
imposed.\11\ In addition to traveling to hearing locations and 
attending hearings, Panelists are expected to review materials in 
preparation for the hearing, participate in conference calls with the 
Hearing Officer, review post-hearing briefs, participate in 
deliberations (which may require a full day or several days of shorter 
sessions), and review and comment on a draft Hearing Panel decision. 
Hearing Panel decisions generally may be appealed to, and are subject 
to discretionary review by, the National Adjudicatory Council 
(``NAC'').\12\ Hearing Panel decisions are also subject to 
discretionary review by FINRA's Board of Governors, and final 
disciplinary action by FINRA may be appealed to the Commission.\13\
---------------------------------------------------------------------------

    \11\ See FINRA Rule 9260 Series.
    \12\ See FINRA Rules 9311 and 9312. In addition, a member of 
FINRA's Board of Governors may call a disciplinary proceeding for 
review by the FINRA Board. See FINRA Rule 9351. A Respondent may 
appeal a final disciplinary action by FINRA to the SEC pursuant to 
Section 19(d)(2) of the Exchange Act and FINRA Rule 9370.
    \13\ See FINRA Rules 9351 and 9370.
---------------------------------------------------------------------------

    The appointment of Panelists is subject to specific criteria under 
Rules 9231 and 9232. These criteria help ensure that Panelists possess 
the requisite experience and expertise to fulfill their 
responsibilities in a manner that results in fair, deliberative 
disciplinary proceedings. The Chief Hearing Officer appoints Panelists 
from a pool that generally includes persons who: (1) Previously served 
on a District Committee; \14\ (2) currently serve or previously served 
on a Regional Committee; (3) previously served on the NAC; (4) 
previously served on a disciplinary subcommittee of the NAC or the 
National Business Conduct Committee; (5) previously served as a FINRA 
Governor or Director, but do not currently serve in either of these 
positions; \15\ or (6) currently serve or previously served on a 
committee appointed or approved by the FINRA Board, but does not serve 
currently on the NAC or as a Director or a Governor of the FINRA 
Board.\16\ If the complaint alleges at least one cause of action 
involving a violation of a statute or a rule described in Rule 9120(u), 
the Chief Hearing Officer may select one Panelist who currently serves 
or previously served on the Market Regulation Committee.\17\
---------------------------------------------------------------------------

    \14\ In 2018, FINRA reorganized its 11 District Committees into 
five Regional Committees.
    \15\ FINRA, Inc. (FINRA), a securities association registered 
under Section 15A of the Exchange Act, is the parent company of 
FINRA Regulation, Inc. (FINRA Regulation). ``Governor'' refers to a 
member of the Board of Governors of FINRA. ``Director'' refers to a 
member of the Board of Directors of FINRA Regulation.
    \16\ See FINRA Rule 9231(b)(1)(A) to (F).
    \17\ See FINRA Rule 9231(b)(2). A former Market Regulation 
Committee member must have served no earlier than four years before 
the date the complaint was served upon the Respondent who was the 
first Respondent served in the disciplinary proceeding. See also 
FINRA Rule 9232(b).
    FINRA Rule 9120(u) refers to the federal securities laws and the 
rules and regulations adopted thereunder and various FINRA rules and 
policies relating to (i) the quotations of securities; (ii) the 
execution of transactions; (iii) the reporting of transactions; and 
(iv) trading practices, including rules prohibiting manipulation and 
insider trading, and trading-related rules such as FINRA Rule 4560 
and FINRA Rule 5200, 6000, 7100, 7200, 7300 and 7400 Series.
---------------------------------------------------------------------------

    The selection of Panelists from among those eligible under Rule 
9231 is subject to criteria set forth in Rule 9232. The Chief Hearing 
Officer must determine which Regional Committee shall be the Primary 
Regional Committee from which he or she will first seek Panelists.\18\ 
Once a Primary Regional Committee has been designated, the Chief 
Hearing Officer selects Panelists from (1) the current members of the 
Primary Regional Committee; (2) the categories of persons eligible to 
serve as Panelists under FINRA Rule 9231 who are located in the same 
geographic area as the Primary Regional Committee; and, if applicable, 
(3) current or former members of the Market Regulation Committee.\19\ 
Selection is based on (1) expertise; (2) the absence of any conflict of 
interest or bias, and any appearance thereof; (3) availability; and (4) 
the frequency with which a person has served as a Panelist during the 
past two years, favoring the selection of a person as a Panelist who 
has never served or served infrequently as a Panelist during that 
period.\20\
---------------------------------------------------------------------------

    \18\ See FINRA Rule 9232(a). The Chief Hearing Officer 
designates a Regional Committee as the Primary Regional Committee 
based on the relevant facts and circumstances of the case, including 
but not limited to (1) the location of a Respondent's principal 
office if the Respondent is or was a member firm; (2) the location 
of a Respondent's office at the time of the alleged misconduct if 
the Respondent is or was an associated person; (3) the location of 
the office of a member or an associated person, or a former member 
or associated person, where the alleged misconduct occurred; (4) the 
location of witnesses at the time of the filing of the complaint, 
especially the location of witnesses who are or were customers of a 
Respondent; (5) the location, at the time of the alleged misconduct, 
of the main, branch, or other office in which supervisory personnel, 
who are or were responsible for the supervision of a Respondent, 
were employed; and (6) the location, at the time of the alleged 
misconduct, of the main, branch, or other office in which 
supervisory personnel, who are or were responsible for the 
supervision of the office, division, function, or segment of the 
member where the alleged misconduct occurred, were employed. See 
FINRA Rule 9232(c).
    \19\ See FINRA Rule 9232(d).
    \20\ See supra footnote 19.
---------------------------------------------------------------------------

    Rule 9232 does not preclude the Chief Hearing Officer from 
appointing Panelists from other categories of those eligible under Rule 
9231. The Chief Hearing Officer may make such an appointment if he or 
she determines that one or more persons from other categories of 
eligible Panelists more clearly meet the criteria of paragraph (d)(1) 
through (4) of Rule 9232 and the public interest or the administration 
of FINRA's regulatory and enforcement

[[Page 29007]]

program would be enhanced by the selection of such Panelists.\21\
---------------------------------------------------------------------------

    \21\ See FINRA Rule 9232(e).
---------------------------------------------------------------------------

Compensation of Panelists
    The Chief Hearing Officer has discretion to compensate any or all 
Panelists of an Extended Hearing Panel at the rate then in effect for 
arbitrators appointed under the Rule 12000 Series.\22\ In practice, the 
Chief Hearing Officer exercises his or her discretion to compensate all 
Panelists on all Extended Hearing Panels. The Chief Hearing Officer 
does not have the authority to compensate Panelists on non-Extended 
Hearing Panels. In practice, because only hearings that are scheduled 
to last five or more days are designated Extended Hearings, Panelists 
who serve on hearings that are scheduled to last four or fewer days are 
not compensated.\23\
---------------------------------------------------------------------------

    \22\ See FINRA Rule 9231(c). The FINRA Rule 12000 Series is the 
Code of Arbitration Procedure for Customer Disputes.
    \23\ OHO conducts disciplinary hearings in all 50 states, 
thereby requiring most Panelists to travel to FINRA hearings. FINRA 
covers all travel-related expenses for Panelists regardless of the 
length of the hearing.
---------------------------------------------------------------------------

    OHO has encountered increasing difficulty in finding eligible 
individuals willing to serve on Hearing Panels. At the same time, the 
number, length and complexity of hearings are increasing. Some eligible 
individuals have indicated that they are only willing to serve on 
Extended Hearing Panels because they want to be compensated for their 
time. Others have indicated that they should be compensated for their 
time in the case of a hearing lasting more than one or two days.
    FINRA places a high value on a fair, efficient, and expeditious 
adjudicatory process. OHO therefore must be able to quickly and 
efficiently assign adjudicated matters to Hearing Panels, both Extended 
and non-Extended, and schedule cases for hearing. FINRA believes OHO's 
ability to identify willing and eligible Panelists will be improved if 
all Hearing Panelists are compensated.
    As is the case with Extended Hearing Panelists, the Chief Hearing 
Officer would compensate all non-Extended Hearing Panelists if granted 
discretion to do so. Rather than adding a grant of discretion to cover 
non-Extended Hearing Panels, FINRA instead proposes to amend Rule 9231 
to provide that all Panelists--i.e., both Extended and non-Extended 
Hearing Panelists--will be compensated at the rate then in effect for 
arbitrators set forth in FINRA Rule 12214(a)(1), (3) and (4). The 
proposed rule change does not establish or change a fee in connection 
with FINRA disciplinary proceedings. Extended Hearing Panelists are 
currently paid pursuant to the payment provisions set forth in Rule 
12214(a)(1), (3) and (4). The proposed rule change merely extends those 
payment provisions to Panelists who serve in connection with non-
Extended Hearings.
    Payments to arbitrators is established in Rule 12214. The payments 
that non-Extended Hearing Panelists would be eligible to receive are 
set forth in Rule 12214(a)(1), (3) and (4). Rule 12214(a)(1) provides 
for a $300 payment to an arbitrator for each hearing session in which 
he or she participates. A typical hearing day may consist of two four-
hour hearing sessions.\24\ Rule 12214(a)(3) establishes a $50 payment 
to an arbitrator for travel to a hearing session that is postponed. 
Rule 12214(a)(4) provides for a $600 payment to an arbitrator if a 
hearing session other than a prehearing conference is postponed within 
ten days before the scheduled date.
---------------------------------------------------------------------------

    \24\ A hearing session is a meeting of four hours or less. See 
FINRA Rule 12100(p). Occasionally, a Panelist may prepare for and 
travel to a hearing only to discover just prior to a hearing session 
that he or she cannot participate. This may occur, for example, if a 
Panelist discovers just prior to the commencement of a hearing 
session that she must recuse herself because of her connection to a 
witness. In such a case, the Panelist will be compensated for one 
hearing session.
---------------------------------------------------------------------------

    Other honoraria provided for by Rule 12214 are inapplicable to 
Hearing Panelists. Rule 12214(a)(2) provides for an additional $125 per 
day to the chairperson for each hearing on the merits. An OHO Hearing 
Officer who is a FINRA employee serves as the chair of each Hearing 
Panel. Thus, the provision in Rule 12214(a)(2) has no effect in the 
case of Hearing Panelists.
    Rule 12214(a)(5) provides for a $100 payment to each arbitrator for 
a prehearing conference that is cancelled by agreement of the parties, 
or is requested by one or more of the parties, within three business 
days of its scheduled date. Hearing Panelists, however, typically do 
not participate in prehearing conferences.\25\ In most cases, the OHO 
Hearing Officer handles a prehearing conference alone. In the limited 
cases where Hearing Panelists participate in a prehearing conference, 
those conferences are set by the OHO Hearing Officer and are not 
scheduled at the request of a party. Therefore, the provision in Rule 
12214(a)(5) is likewise inapplicable to Hearing Panelists.
---------------------------------------------------------------------------

    \25\ See FINRA Rule 9241.
---------------------------------------------------------------------------

    In addition, the honoraria established in Rule 12214(b), (c) and 
(d) do not apply to Hearing Panelists. Rule 12214(b) authorizes a 
higher or additional honorarium in the case of a foreign hearing 
location; all FINRA disciplinary hearings, however, occur at U.S. 
locations. Rule 12214(c) provides for honorarium payments to 
arbitrators for deciding motions concerning discovery, contested 
subpoena requests, and contested orders for production or appearance 
without a hearing session. Subpoenas are not issued in FINRA 
disciplinary hearings, however, and discovery-related motions are 
decided by the OHO Hearing Officer alone.\26\ Rule 12214(d) provides an 
additional honorarium for explained decisions written in support of 
arbitration awards. This provision does not apply to Hearing Panel 
decisions written in connection with FINRA disciplinary proceedings, 
which are governed by Rule 9268, and is therefore inapplicable to 
Hearing Panelists.
---------------------------------------------------------------------------

    \26\ See FINRA Rules 9252 and 9253.
---------------------------------------------------------------------------

    FINRA notes that, except in limited circumstances, Rule 12214 does 
not provide for payments for time spent on travel or preparation. Non-
Extended Hearing Panelists, like Extended Hearing Panelists, therefore 
still may accrue not-insubstantial amounts of uncompensated time in 
connection with service on a Hearing Panel.
    FINRA has filed the proposed rule change for immediate 
effectiveness. The proposed rule change will become operative 30 days 
after the date of filing.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(8) of the Act,\27\ which requires, among 
other things, that FINRA rules provide a fair procedure for the 
disciplining of members and persons associated with members. FINRA 
believes that the proposed rule change, consistent with this purpose of 
the Act, will help assure that complaints filed with OHO continue to be 
heard and resolved in a timely manner by Panelists with the expertise, 
experience, and perspective necessary to render a fair and informed 
judgment and, where necessary, to impose appropriately remedial 
sanctions. By compensating all Panelists, the proposed rule change will 
encourage a greater number of eligible individuals to agree to devote 
their time and experience in service as Panelists. This will enable the 
Chief Hearing Officer to appoint Hearing Panels from a larger and 
potentially more diverse group of eligible individuals willing to serve 
and capable of responding to the complex issues and time demands 
presented by disciplinary hearings.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78o-3(b)(8).

---------------------------------------------------------------------------

[[Page 29008]]

    FINRA also believes that the proposed rule change is consistent 
with the provisions of Section 15A(b)(6) of the Act,\28\ which 
requires, among other things, that FINRA rules must 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. FINRA believes that encouraging a 
greater number of eligible individuals to serve as Panelists by 
compensating them for their time and expertise will enhance FINRA's 
disciplinary processes, promote high business standards for FINRA 
members, and allow for the prompt adjudication of allegations of 
misconduct by FINRA members and their associated persons. It is in the 
public interest, and consistent with the Act's purpose, that FINRA 
disciplinary proceedings be timely resolved and that appropriate 
sanctions be imposed where necessary to redress customer harm and deter 
future misconduct.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

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 is 
intended solely to enhance the administration of FINRA's process for 
the disciplining of members and persons associated with members. FINRA 
believes the proposed rule change will allow the Chief Hearing Officer 
flexibility to appoint Panelists and thereby maintain the timely 
progress of cases to a hearing. FINRA does not believe that the 
proposed rule change will have any negative effect on members or impose 
any new costs.
Economic Impact Assessment
    As described above, under current FINRA rules, the Chief Hearing 
Officer may pay honoraria only to individuals who serve as Panelists at 
Extended Hearings. The rules do not allow OHO to pay honoraria to 
Panelists at non-Extended Hearings. As a result, potential Panelists 
may lack sufficient incentive to serve on non-Extended Hearing Panels, 
which impairs OHO's ability to assemble Hearing Panels for non-Extended 
Hearings expediently. FINRA believes that paying honoraria to all 
Hearing Panelists, regardless of whether the hearing is designated as 
an Extended Hearing, will expand the number of qualified current or 
retired industry members willing to serve on Hearing Panels.
Economic Baseline
    The baseline for the proposal is Rule 9231, which allows for 
payments to Panelists serving on Extended Hearing Panels only. Based on 
FINRA's experience, this inequity creates a preference among eligible 
individuals to serve on Extended Hearing Panels. This can limit the 
pool of Panelists available to serve for non-Extended Hearings.
    Of the 59 hearings that occurred between 2017 and 2019, 51% were 
Extended Hearings, and thus generated payments to Panelists.\29\ In the 
three-year sample period, OHO conducted hearings, on average, 82 days 
per year, of which 57 days were for Extended Hearings. FINRA spent, on 
average, $68,400 annually to pay Extended Hearing Panelists.\30\
---------------------------------------------------------------------------

    \29\ In 2017, there were 25 hearings, 14 of which were Extended 
Hearings; in 2018, of 21 hearings, 10 were Extended Hearings; and in 
2019, of 13 hearings, six were Extended Hearings.
    \30\ Figures based on a three-year period from January 2017 to 
December 2019.
---------------------------------------------------------------------------

Anticipated Benefits
    The proposal provides a monetary benefit of $600 per day to Hearing 
Panelists serving on non-Extended Hearing Panels, among other potential 
payments. This proposed honorarium may potentially create a new 
incentive for industry members to serve (or continue to serve) on non-
Extended Hearing Panels. The proposal may also benefit FINRA as it 
should increase the number of eligible individuals willing to serve as 
Panelists and make it easier for FINRA to assemble Hearing Panels with 
appropriate experience and expertise, which is the regulatory 
objective.
    Both industry members and investors share an incentive to have 
enforcement actions timely brought before a suitably qualified panel. 
To the extent that the proposal expands the pool of willing Panelists, 
and thereby improves FINRA's ability to expeditiously organize expert 
Hearing Panels, both of these groups will benefit.
Anticipated Costs
    The proposed rule change, which expands honoraria to non-Extended 
Hearing Panelists, would not impose any additional requirements or fees 
on firms or respondents in FINRA disciplinary hearings. Direct costs 
associated with this proposal will be incurred by FINRA only. FINRA 
estimates these costs at approximately $26,400 per year. Based on its 
experience with paying honoraria to Panelists in Extended Hearings, OHO 
does not anticipate that paying honoraria to Panelists serving on non-
Extended Hearing Panels will adversely impact the hearing process.
Alternatives Considered
    FINRA considered allowing the Chief Hearing Officer to use his or 
her discretion in determining whether to compensate Hearing Panelists. 
A primary objective of the amendment is to increase eligible Hearing 
Panelists' incentive to serve. Therefore, requiring compensation in the 
form of an honorarium at the rate set for arbitrators to all Hearing 
Panelists--rather than at the discretion of the Chief Hearing Officer--
should only increase the likelihood that the amendment will yield the 
desired outcome.

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 \31\ and Rule 19b-
4(f)(6) thereunder.\32\
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78s(b)(3)(A).
    \32\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    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

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or

[[Page 29009]]

     Send an email to [email protected]. Please include 
File Number SR-FINRA-2020-014 on the subject line.

Paper Comments

     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-2020-014. 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 (http://www.sec.gov/rules/sro.shtml). 
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. All comments received will be 
posted without change. Persons submitting comments are cautioned that 
we do not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
FINRA-2020-014 and should be submitted on or before June 4, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\33\
---------------------------------------------------------------------------

    \33\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-10285 Filed 5-13-20; 8:45 am]
BILLING CODE 8011-01-P