Financial advisors who have received an adverse disclosure event displayed through the Central Registration Depository (CRD) system often feel overwhelmed and concerned about how it may impact their professional reputation and livelihood. Although the Financial Industry Regulatory Authority (FINRA) and other regulators claim that the CRD system aims to protect investors and the financial market, unfair disclosures can carry significant and devastating consequences to individual financial advisors. If you are interested in pursuing an expungement request to have an inaccurate or baseless disclosure removed from the CRD system, discuss your options with a trusted securities law attorney to determine the best path forward. In the meantime, here are three common questions that financial advisors have about the FINRA expungement process.
When is Expungement Granted?
In order for FINRA to approve an expungement request, strict criteria must be met. According to FINRA Rule 2080, expungement may be granted if: “(A) the claim, allegation, or information is factually impossible or clearly erroneous; (B) the registered person was not involved in the alleged investment-related sales practice violation, forgery, theft, misappropriation or conversion of funds; or (C) the claim, allegation or information is false.” As information about broker-customer disputes is reported to the CRD without thorough investigation, many brokers become subjected to inaccurate, misleading, or outright false disclosures.
How Can I Have a Customer Disclosure Expunged?
Before FINRA can remove customer dispute information from the CRD system, it must receive a court order to move forward with the expungement. First, you’ll need to initiate a request for expungement before a panel of independent arbitrators. If the panel honors your request for expungement, you must still seek an order from a court confirming this arbitration award and present it to FINRA. Alternatively, you may initiate the process directly in a court of competent jurisdiction instead of moving through the arbitration proceeding. Once FINRA receives the expungement order from the court, it will remove the customer dispute information from the CRD system.
Do I Need a Lawyer During the FINRA Expungement Process?
Although working with an attorney during the FINRA expungement request process is not mandatory, it’s highly recommended to do so. The process often takes time and involves a series of strict rules, regulations, and requirements. Working with an experienced securities law attorney is the best way to ensure that your request moves forward smoothly and successfully.
If you’re interested in learning more about the FINRA expungement process, call Judex Law, LLC, today at (303) 523-4022 to discuss your situation with an experienced securities law attorney.