FINRA Board Approves Expungement Changes

By Melanie Waddell

News October 04, 2019 at 09:54 AM

Share & Print

The Financial Industry Regulatory Authority's Board has approved changes to its expungement process by, among other things, creating a roster of arbitrators with enhanced training and experience to decide whether to expunge customer complaints.

The arbitrator panel would be selected in certain instances to decide an associated person's request to expunge customer dispute information. The proposed amendments will be filed with the Securities and Exchange Commission for approval.

FINRA issued a Regulatory Notice in December 2017 requesting comment on the proposed plans to establish a roster of arbitrators. The Dispute Resolution Task Force in its final report recommended that FINRA create such a roster.

Regulatory Notice 17-42 also proposed to change the timeframe in which an associated person can seek expungement of the customer dispute information, as well as the unanimous consent of a three-person panel of arbitrators to grant expungement.

FINRA also said at the time that it was discussing with the North American Securities Administrators Association more extensive changes to the process.

Sen. Elizabeth Warren, D-Mass., told FINRA CEO Robert Cook in mid-March that the broker-dealer self-regulator must ensure that any revamped broker expungement rules end up being tougher, as broker expungements "are often associated with broker misconduct" and recidivism.

— Related on ThinkAdvisor: