FINRA Proposes Changes to Expungement Requests Procedures

In late September of 2020, the Financial Industry Regulatory Authority (FINRA) filed several proposed amendments with the SEC. These changes affect the codes of arbitration procedure relating to requests to expunge customer dispute information. If the SEC accepts these proposed amendments, the process of having unfair customer complaints expunged could become even more difficult for financial advisors and institutions. Here’s what you need to know.

New Requirements on Expungement Requests

Under the proposed FINRA expungement request amendments, customers will still be notified of the expungement request and receive a copy of the statement of claim requesting expungement, along with any answer. Additionally, customers will be served “with the statement of claim within 10 days of filing the statement of claim with FINRA and any answer within 10 days of filing each answer with FINRA.” These new requirements apply to expungement requests that are either filed “during an investment-related, customer initiated arbitration by an associated person” or filed “by an associated person separate from a customer arbitration (straight-in request).”

Added Definitions For Deficient Claims

FINRA also proposed additional provisions for denying expungement requests. Under the new rules, there are four new grounds for a claim to be deemed deficient. The Director may deny a request that does not include the CRD number of the party requesting expungement or a claim that lacks the CRD occurrence number that pertains to the request. The Director can also deny expungement requests that do not have the case name and docket number of the arbitration resulting in the customer dispute information or those that lack explanations of whether expungement of the same customer dispute information was previously requested or decided.

Other Important Changes to the Expungement Request Process

Numerous additional amendments have been proposed, such as establishing a roster of arbitrators who have enhanced training and experience. FINRA intends to use this roster to randomly generate three-person panels to decide straight-in requests. If the SEC accepts these changes, FINRA can establish new procedural requirements for expungement hearings and implement other substantial changes. These amendments may make the already difficult process of pursuing an expungement request even stricter, so contact a skilled securities law attorney to discuss your options.


If you want to learn more about how to pursue an expungement request with FINRA, contact Judex Law LLC today at (303) 523-4022 for customized and effective legal guidance.

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