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In the Matter of the Application of
For Review of Disciplinary Action Taken by FINRA ORDER GRANTING MOTION TO DISMISS APPLICATION
I. Background A. Lenahan failed to respond to FINRA's requests for information.
FINRA opened an investigation and requested information from Lenahan pursuant to FINRA Rule 8210 after one of her former customers lodged a complaint. The complaint was filed in September of 2011, and dated from Lenahan's association from 1997 to 2009 with
2 FINRA's first request for information was sent to Lenahan in a
Although Lenahan received the letter and signed a certified mail return receipt on
FINRA sent a second letter (the "Second Letter") requesting information in
B. FINRA suspended and then barred Lenahan for her failure to respond.
After Lenahan failed to respond,
Pursuant to FINRA Rule 9552(h), Lenahan was barred from association with any FINRA member in any capacity on
Lenahan filed her application for review with the Commission on
We must dismiss Lenahan's application for review because she failed to exhaust her administrative remedies. Lenahan was given the opportunity to avail herself of FINRA's administrative process through taking corrective action, requesting a hearing in response to the notice of suspension, or filing for termination of the suspension. Lenahan failed to exercise her rights at any stage of the process before FINRA and, thus, failed to exhaust her administrative remedies.4 The Commission has consistently held that "we will not consider an application for review if that applicant failed to exhaust FINRA's procedures for contesting the sanction at issue."5 Holding otherwise would severely hinder the self-regulatory capabilities of the SROs and prevent the efficient resolution of disputes between SROs and their members.6 As the Second Circuit has reasoned: Were SRO members, or former SRO members, free to bring their SRO-related grievances before the
Even if Lenahan had exhausted her administrative remedies, we must dismiss her application for review because it was untimely. Under Section 19(d)(2) of the Securities Exchange Act of 1934, an applicant has thirty days to submit an application to the Commission for review of a disciplinary action imposed by a self-regulatory organization.11 Lenahan's application was due
Lenahan's application for review must be dismissed because she failed to exhaust her administrative remedies and failed to timely file her application. Accordingly, IT IS ORDERED that FINRA's motion to dismiss the application for review filed by
By the Commission.
1 FINRA Rule 8210(a)(1) provides in relevant part that "FINRA staff shall have the right to: require a . . . person associated with a member . . . to provide information . . . in writing . . . with respect to any matter involved in the investigation, complaint, examination, or proceeding."
2 FINRA Rule 9552(h) states that "A member or person who is suspended under this Rule and fails to request termination of the suspension within three months of issuance of the original notice of suspension will automatically be expelled or barred." 3 Although Lenahan's application for review was filed almost nineteen months after her bar, she had thirty days after imposition of the bar to appeal to the Commission. Therefore, her application for review is almost eighteen months late, rather than nineteen months.
4 See Royal Sec. Corp., Exchange Act Release No. 5171, 36 S.E.C. 275, 1955 WL 43159, at *2 n.3 (
6 MFS Sec. Corp. v.
8 In her response to FINRA's motion to dismiss, Lehanan explains in detail how she was "inundated with personal, emotional and business pressures" at the time of FINRA's requests for information.
9 FINRA Rule 8210(c) ("No member or person shall fail to provide information . . . pursuant to this Rule."); cf.
"Delay and neglect on the part of members and their associated persons undermine the ability of [FINRA] to conduct investigations and thereby protect the public interest." Paz Sec., Inc., Exchange Act Release No. 57656, 2008 WL 1697153, at *4 (
11 15 U.S.C. section 78s(d)(2).
12 Commission Rule of Practice 420(b), 17 C.F.R. section 201.420(b). See generally
13 See, e.g., Orbixa Techs., Exchange Act Release No. 70893, 2013 WL 6044106, at *4 n.15 (
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