As a professional in the financial industry, you recognize the importance of your reputation. Clients and colleagues need to trust that you are acting in good faith at all times. One of the quickest and most accessible ways for potential clients to assess your professional standing is to visit your BrokerCheck profile. Unfortunately, even minor or downright false customer dispute information can appear on BrokerCheck, presenting a misleading or inaccurate picture of your professionalism and trustworthiness. Since the mission of the Financial Industry Regulatory Authority (FINRA) is to “protect investors and ensure the market’s integrity,” any customer dispute information is taken at face value and posted to the Central Registration Depository (CRD)—regardless of its accuracy or merit. Once the information is added to the CRD, it appears on the individual advisor’s BrokerCheck profile, which is publicly available and searchable.
FINRA claims that it’s best to err on the side of the consumer, so it does not investigate or assess the validity of a customer’s complaint before adding it to the CRD and BrokerCheck. However, FINRA allows professionals affected by unfair or false customer dispute information to pursue an expungement request to have the information removed. As of the fall of 2023, FINRA’s newly enacted rules affecting the expungement request process have added a few more challenges to those seeking the removal of inaccurate information from the CRD. While the expungement request process may seem daunting and confusing, working with a dedicated and experienced securities law attorney who specializes in FINRA expungement request cases is the best way to maximize your chances of obtaining your desired outcome. Let’s take a look at some of the most common questions that financial advisors may have about FINRA’s expungement request process so you can make informed decisions with greater certainty and confidence.
What Changes Did FINRA Make to the Expungement Request Process?
As of October 2023, FINRA’s new rules have taken effect and apply to all expungement requests. While there are several updates and amendments that apply to this process, let’s focus on some of the primary changes that have the greatest impact on such requests. First, the amended rules require a panel of three specially trained and randomly selected arbitrators to oversee expungement requests. Under the previous rules, a single arbitrator could oversee “straight-in” requests, but this is no longer allowed. Instead, expungement requests must be handled by a panel of three arbitrators, which can make scheduling logistics more challenging. Additionally, the panel must unanimously approve the expungement request in order to grant relief. Another change to the existing rules is a shortened time frame in which an advisor or securities professional can make an expungement request.
Do FINRA’s New Rules Make the Expungement Process Harder?
When FINRA announced its proposed changes, many professionals throughout the financial industry voiced their concerns about how these amendments would likely make it more difficult to obtain expungements. FINRA and the Securities and Exchange Commission (SEC) went through with approving the amendments, and the financial sector and the public as a whole are keeping an eye on how these rules are affecting the expungement request process. Although expungement relief is still possible, the added rules do appear to make such requests more restrictive and challenging to navigate. For instance, the shortened time frame, the mandatory panel of specially trained arbitrators, and unanimous verdicts may limit the number of expungement relief requests granted through this newly adopted system. Additionally, the FINRA director must now contact state regulators and encourage them to participate in and attend the hearings and proceedings. With more parties involved in the matter, the process may take longer to move forward. Expunging customer dispute information from BrokerCheck can be a challenging endeavor, but you do not have to navigate the process on your own. Enlisting the support of a highly qualified FINRA expungement lawyer is the best way to feel empowered and prepared to move through every step of the process.
How Does FINRA Decide to Award Expungement Relief?
The panel of three arbitrators overseeing an expungement relief request must unanimously agree to grant such relief, and only if at least one of three grounds are established. According to FINRA’s revised rules, expungement relief can only be granted if one of the following grounds has been satisfied: “(1) The claim, allegation or information is factually impossible or clearly erroneous; (2) The associated person was not involved in the alleged investment-related sales practice violation, forgery, theft, misappropriation or conversion of funds; or (3) The claim, allegation or information is false.” When you meet with your FINRA expungement attorney, you can assess the details of your claim and identify the evidence you can provide to support and strengthen your case.
Do I Need a Lawyer to Make an Expungement Request?
Although FINRA does not require individuals seeking expungement relief to hire legal counsel in order to proceed with their request, doing so is highly recommended. First of all, the arbitration process can be daunting and intimidating, even to the most experienced financial advisors and securities professionals. When you involve the expertise of an experienced securities law attorney, you can rest assured that your best interests will be safeguarded and upheld at every stage of the process. Your attorney will remain at your side to answer your questions and address your concerns as they arise. They will also help you understand what to expect during every phase of the process so you can move forward with greater confidence. If you are ready to learn more about how to have customer dispute information expunged, reach out to Judex Law, LLC, at your earliest convenience, to discuss your options with a dedicated and friendly securities law attorney. Founding attorney Tosh Grebenik has successfully defended professionals in the financial and securities industries from customer complaints and secured expungement relief of baseless or wrongful complaints. If you’re looking for effective, time-tested, and customized legal services, contact our office to get started.
Judex Law, LLC, offers personalized legal guidance to professionals throughout the financial industry. If you have questions about FINRA’s expungement request process, please contact our office today at (303) 523-4022 to get started with an experienced and friendly securities law attorney.
