Quick Answer
Written customer complaints are kept at each Office of Supervisory Jurisdiction (OSJ) for at least 4 years, with per-event reports due in 30 days and a quarterly statistical roll-up due by the 15th. Regulatory discipline runs through FINRA investigations and the Code of Procedure; private disputes run through the Code of Arbitration (binding) and the Code of Mediation (voluntary, non-binding).
The whole unit on one sheet: what firms keep and report, how discipline flows, and the arbitration-versus-mediation lines the exam loves.
The One-Liners That Win Points
- Code of Procedure = FINRA's internal disciplinary court (Department of Enforcement prosecutes, Hearing Panel tries, National Adjudicatory Council hears appeals).
- Code of Arbitration = binding resolution of monetary and industry disputes; the award is final and enforceable.
- Code of Mediation = voluntary, non-binding settlement facilitation; the mediator facilitates but never decides.
- Customers have a unilateral right to compel FINRA arbitration, even with no predispute agreement; a member cannot compel a customer without a signed predispute agreement.
- Industry disputes (compensation, defamation on Form U5, branch separations) MUST be arbitrated; a predispute clause waiving that forum is itself a violation.
- Expungement takes TWO steps: an arbitration panel finding under one of three standards PLUS court confirmation. FINRA does not remove Central Registration Depository (CRD) entries on its own.
- Bar = for associated persons (APs); expulsion / revocation = for member firms. Do not swap the terms.
Numbers to Lock In
| Item | Value |
|---|---|
| Written complaint retention at the OSJ | at least 4 years |
| Per-event report (theft / forgery, regulatory action, settlement, statutory disqualification) | within 30 days of firm knowledge |
| Internal-conclusion report | within 30 days of the firm's conclusion |
| Quarterly statistical report deadline | by the 15th of the month after quarter-end |
| Per-event settlement threshold | over $15,000 (registered person) / over $25,000 (firm) |
| FINRA jurisdiction over former APs | 2 years after termination of registration |
| Failure-to-respond escalation | suspension, then a bar after 90 days of non-compliance |
| Form U5 disclosure release | 3 business days after FINRA processing |
| Censure floor | skip censure if total sanctions are $5,000 or less |
| Appeal window to the National Adjudicatory Council | 25 days after service of the decision |
| Simplified arbitration threshold | $50,000 or less (excludes interest and expenses) |
Top Gotchas
- Procedure vs Arbitration vs Mediation is the classic trap. Procedure = FINRA disciplines you; Arbitration = binding monetary dispute; Mediation = voluntary, mediator cannot impose terms.
- The complaint retention floor is 4 years, not 3. The Securities Exchange Act books-and-records floor is 3 years, but the longer FINRA period controls.
- Theft / forgery complaints hit BOTH reports. They trigger a 30-day per-event report AND the quarterly roll-up; an excessive-trading complaint is quarterly-only.
- The $15,000 / $25,000 figure is the settled or adjudicated amount, not the size of the original demand.
- Expungement is not granted by FINRA. A panel must make an affirmative finding (factually impossible or clearly erroneous, not involved, or false); a dismissal or below-threshold settlement is not enough, and court confirmation is still required.
- Failure to respond to a FINRA information request is its own violation, and the sanction is usually a bar even if the underlying matter would have produced nothing.
- The National Adjudicatory Council can INCREASE sanctions on appeal. Appellate risk runs both ways.
- Mediation does NOT stay a pending arbitration unless the parties expressly agree; deadlines keep running.
- Simplified arbitration is paper-only by default, but in a customer case only the customer can demand a hearing.
One-Breath Recap
Firms keep written customer complaints at the OSJ for at least 4 years, file per-event reports within 30 days (theft or forgery, regulatory actions, settlements over $15,000 for a registered person or $25,000 for the firm, statutory disqualifications), and file the quarterly statistical roll-up by the 15th of the month after quarter-end. Regulatory discipline flows through FINRA investigations (2-year tail over former APs, sanctions menu, refuse-to-respond bar) into the Code of Procedure (Hearing Panel decides by majority, 25-day appeal to the National Adjudicatory Council, then FINRA Board, SEC, and the courts). Private disputes split into binding arbitration (customer's unilateral right, non-waivable industry mandate, $50,000-or-less simplified track) and voluntary, non-binding mediation that never stays a pending arbitration. Expungement stays narrow: an arbitration finding under one of three standards plus court confirmation. Keep Procedure, Arbitration, and Mediation straight and this unit answers itself.
Need more than the recap? This is a condensed summary. If it is not enough, read the full Disciplinary Actions and Customer Disputes unit for the complete lesson.