In September of 2020, the Financial Industry Regulatory Authority (FINRA) submitted a number of proposed rule changes to the SEC. Should the SEC approve these new rules, brokers, firms, and financial advisors may find it much harder to successfully expunge a consumer dispute disclosure. Under these proposed changes, brokers will have a much shorter window in which to file an expungement request and “straight-in” requests would need to be heard by a panel of three arbitrators rather than a sole arbitrator. Here are some key takeaways from the comprehensive document FINRA recently submitted to the SEC.
The Purpose of the Proposed Changes
These changes have been in the works for several years. In 2017, FINRA released an initial proposal, but a number of complaints emerged that required FINRA to rework these proposed changes. In this newly revised proposal, FINRA indicates that it aims to dramatically reduce the number of expungement requests it receives by significantly shortening the period in which a broker may file an expungement request. Unfortunately, this means that financial advisors or brokers who have a complaint that’s more than two years old may not be able to file an expungement request under these new rules.
Shortening the Expungement Request Timeline
According to these proposed rules, a broker or financial advisor “would be barred from requesting expungement if: (1) more than two years have elapsed since the close of the customer arbitration or civil litigation that gave rise to the customer dispute information; or (2) there was no customer arbitration or civil litigation involving the customer dispute information, and more than six years have elapsed since the date that customer complaint was initially reported to the CRD system.” Due to this substantially shortened window, it’s essential that brokers take swift action in order to ensure that their expungement request is valid and adheres to the parameters set forth under these new rules.
How a Skilled Broomfield Securities Law Attorney Can Help
While the shortened window for expungement requests is the cornerstone of FINRA’s proposed changes, there are several other nuanced rules that may impact your future. For instance, the determination of whether your expungement request was filed within the appropriate time frame would now be made by the Director, not the arbitrators. Should the SEC accept and finalize these proposed rule changes, it’s imperative that you understand your options for protecting your professional reputation from unfounded and erroneous customer complaints. Reach out to an experienced securities law attorney right away to discuss the specifics of your situation.
Questions about how FINRA’s proposed new rules could impact your ability to successfully obtain an expungement? Contact Judex Law LLC today at (303) 523-4022 to discuss your options with a dedicated Broomfield securities law attorney today.
