June 5, 2009
FINRA Seeks SEC Approval to Make Pilot Cease & Desist Program Permanent
FINRA filed with the SEC a proposed rule change to adopt on a permanent basis the temporary and permanent cease and desist authority pilot program without any substantive changes to the terms of the existing program. In May 2003, the Commission approved, on a two-year pilot basis, a rule change that gave FINRA authority to issue temporary cease and desist orders (“TCDOs”) and made explicit FINRA’s ability to impose permanent cease and desist orders as a remedy in disciplinary cases. The pilot program also gave FINRA authority to enforce cease and desist orders. In June 2005 and June 2007, the SEC approved two-year extensions of the pilot program. The current two-year pilot expires on June 23, 2009.
FINRA is proposing to make the pilot program permanent without any substantive changes to the terms of the existing program. When it first sought cease and desist authority, FINRA stated that it would use the authority sparingly. That has been the case. Since the pilot program was first approved in 2003, FINRA has issued only one TCDO and one permanent cease and desist order (both in the same case). If adopted on a permanent basis, the cease and desist rules would continue to be used judiciously.
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