FINRA Further Restricts Financial Advisors’ Arbitration and Disclosure Expungement Rights

While the Financial Industry Regulatory Authority (FINRA) serves many functions, it investigates customer complaints and disciplines financial advisors for any number of violations. Unfortunately, even meritless claims can appear on an advisor’s CRD and BrokerCheck records, causing lasting damage to their professional reputation and future within the industry. In recent months, FINRA has taken additional steps to restrict advisors’ arbitration and disclosure expungement rights. Here’s what you need to know about these new attempts to limit your rights.

How FINRA’s Disclosure Process Works

FINRA used to provide advisors facing customer complaints with a forum in which a neutral arbitrator could hear their side of the story. The arbitrator would examine the facts of the case and determine whether the disclosure fulfilled FINRA’s expungement standards and if so, order the expungement of a baseless disclosure from the advisor’s CRD and BrokerCheck records. This process could be lengthy and challenging to navigate, but advisors had the opportunity to dispute the complaints and preserve their reputation.

FINRA Adopts New Restrictions, Limiting Advisor Rights

In response to external pressures to make disclosure removal more restrictive, FINRA increased fees substantially for advisors pursuing an expungement. Before this change, an advisor seeking expungement could expect to pay a few hundred dollars during the process; as of July 2020, this figure has jumped to nearly $10,000. Other barriers, such as limiting accessibility and imposing complex procedural requirements, further prevent advisors from taking action against an unfair or even overtly false disclosure.

Defend Your Reputation Today

Now more than ever, facing a FINRA investigation or pursuing expungement relief can feel like an uphill—or even impossible—battle. However, working with a trusted securities law attorney can give you the confidence and support you need to navigate this challenging time and obtain a favorable outcome. You don’t have to go through this difficult process on your own—reach out to an understanding attorney today to discuss your situation and determine the best path forward.


Learn more about your options for pursuing expungement relief by calling Judex Law LLC today at (303) 523-4022.

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