Introduction

Welcome to Disciplinary Actions and Customer Disputes: the requirements that govern how a member firm handles customer grievances, regulatory investigations, formal disciplinary proceedings, and the parallel arbitration and mediation forums where most customer-vs-broker disputes are actually resolved.

The unit walks through:

• The per-event reporting and quarterly statistical reporting mechanics
• The narrow path to expunging customer complaints from the Central Registration Depository (CRD) record
• FINRA's information-gathering authority and the sanctions menu that backs it
• The Code of Procedure that governs internal disciplinary hearings
• The parallel Customer Code and Industry Code arbitration frameworks that handle private disputes
• The voluntary Code of Mediation

Exam Weight: Part of 30% (~45 questions across Function 2)

What You'll Learn

In this unit, you'll cover:

• Customer Complaints: The Office of Supervisory Jurisdiction (OSJ) recordkeeping requirement with its 4-year retention period, the 30-day per-event reporting triggers (theft / forgery complaints, regulatory actions, statutory disqualifications, settlements above $15,000 / $25,000), the internal-conclusion reporting trigger, and the quarterly statistical roll-up due by the 15th day of the month following the calendar quarter
• Expungement of Customer Dispute Information: The two-step requirement (arbitration award plus court confirmation), the three substantive standards (factually impossible / clearly erroneous, not involved, or false), the requirement to name FINRA as a party to the court confirmation, and the narrow waiver path FINRA may grant in extraordinary circumstances
• FINRA Investigations: The information-and-testimony authority, the 2-year jurisdictional tail over former associated persons, the sanctions menu (censure, fine, suspension, bar, expulsion, restitution), the BrokerCheck disclosure framework, and the summary-action consequences for failure to pay fines
• Code of Procedure: The Department of Enforcement complaint mechanic, the Hearing Panel composition (one Hearing Officer plus two industry panelists), the written decision (with default-decision availability), the 25-day appeal window to the National Adjudicatory Council (NAC), the discretionary FINRA Board review, and the SEC review path
• Code of Arbitration: The customer's unilateral right to compel FINRA arbitration, the mandatory industry-code arbitration mandate for compensation, defamation on Form U5, and branch separations; the $50,000-or-less simplified arbitration framework; and the default proceedings against suspended or expelled respondents
• Code of Mediation: The strictly voluntary nature of mediation, the default rule that mediation does not stay a pending FINRA arbitration, and the confidentiality framework that protects mediation communications from later use in arbitration or court

Why This Matters

The Series 24 exam tests three principal-level themes from this material:

• Whether customer complaint and reporting infrastructure works as designed: written complaints filed and preserved at the OSJ for 4 years, per-event reports filed within 30 days, quarterly statistical reports filed by the 15th of the month following the calendar quarter, and self-conclusion reports when the firm itself determines a violation occurred
• Whether the firm understands the difference between regulatory discipline (FINRA investigations and Code of Procedure, Department of Enforcement, Hearing Panel, NAC, SEC) and private dispute resolution (Code of Arbitration and Code of Mediation) and applies the correct procedural framework to each
• Whether the firm honors the customer's unilateral arbitration right and the non-waivable industry-code arbitration mandate, neither of which can be eliminated by a predispute agreement

A firm that quietly settles a customer complaint above $15,000 without filing the per-event report has a separate violation independent of the underlying complaint. A firm that puts an industry-arbitration waiver into its rep employment contracts has violated FINRA rules even if no dispute ever arises. The exam draws supervisory questions from the procedural infrastructure, not just the underlying conduct.

Let's start with the customer complaint recordkeeping and reporting framework: how the firm captures, files, and reports grievances before they ripen into discipline or arbitration.