The last few years have seen a number of notable changes implemented by the Financial Industry Regulatory Authority (FINRA). In its quest to pursue “its mission of promoting investor protection and ensuring market integrity in many ways,” FINRA’s regulatory compliance and enforcement services “act quickly to identify misconduct, stop fraud and prevent losses, obtain restitution for harmed investors and remove bad actors from FINRA membership.” However, this vigorous crackdown on potential misconduct can lead to misleading, exaggerated, or even downright false customer dispute information appearing on an individual broker’s profile in the publicly available database, BrokerCheck. Customer complaints are not investigated before they are displayed on the financial advisor’s profile, which can severely endanger their professional reputation.
In order for the financial advisor to have this information removed from their profile, they can request a FINRA expungement hearing through FINRA’s Dispute Resolution Services (DRS). The Codes of Arbitration Procedure have experienced several noteworthy updates in recent years, the latest of which were recently highlighted in FINRA’s quarterly newsletter, The Neutral Corner. Let’s take a closer look at some of the most recent amendments and the proposed rule changes that could affect the FINRA arbitration process, particularly when it comes to expungement requests. With a highly experienced and trusted securities law attorney by your side, you can assess your options for seeking an expungement so that you can enjoy a brighter future as a securities professional.
Recent Rule Amendments Approved By FINRA
First, let’s take a look at some of the rule changes that FINRA has recently implemented and how they could affect the expungement request process. Below are just a few of the most recent amendments that have been approved (as of March, 2025).
Amendments to Rule 12800
One of the most recently implemented changes concerns changes to Rule 12800. Essentially, “the amendments affect the applicability of the Document Production Lists in simplified customer arbitrations.” FINRA uses the Document Production Lists to “outline presumptively discoverable documents that the parties would exchange, without arbitrator or DRS staff intervention.” The amendments give the customers the authority to decide whether to use the Document Production Lists in paper cases and special proceedings. Prior to these changes, the rules and procedures created conflicting and confusing guidance as to whether documents or information would be discoverable. These amendments aim to “increase parties’ awareness and understanding of the discovery process in simplified customer arbitrations in which the customer requests a regular hearing.” The changes are effective for all arbitration cases filed on or after March 3, 2025.
Amendments to Rule 13606
Another recent amendment pertains to Rule 13606, which addresses how official records of expungement hearings should be handled and distributed upon request. According to the regulatory notice detailing the approval of the amendment, “FINRA has amended Rule 13606 to add that the Director will provide a copy of the official record of an expungement hearing held pursuant to Rule 13805, and any transcription if the recording is transcribed, to any customers, upon request, who attend and participate in the expungement hearing, or who provide their position on the expungement request in writing.” This change aims to support other amendments to the Codes of Arbitration Procedure that encourage more active participation of customers and other affected parties in the expungement hearing process. These changes took effect on December 1, 2024.
Proposed Rule Changes and Filings Worth Noting
In addition to highlighting the amendments that have already been approved and implemented, FINRA’s quarterly newsletter also notes two proposed rule changes that have been filed. Let’s take a look at how these recent rule filings could affect FINRA arbitration proceedings or expungement hearings if they were to be approved by the Securities and Exchange Commission (SEC).
Proposed Rule Change Regarding the Arbitrator List Selection Process
According to a recent release by FINRA, it is seeking to amend the Codes of Arbitration Procedure to change certain provisions relating to the arbitrator list selection process. These changes aim to “increase the opportunity for public arbitrators who are not qualified to serve as chairpersons to be selected by a computer algorithm, known as the ‘list selection algorithm,’ for the list of arbitrators that is sent to the parties in certain customer and industry disputes that have a three-arbitrator panel.” Moreover, these proposed amendments would ostensibly support FINRA’s efforts to increase the transparency of the arbitrator list selection process. The SEC is still reviewing the proposed rule changes as well as comments relating to these amendments, so formal approval is pending.
Proposed Rule Change Concerning Accelerating Arbitration Proceedings For Age or Health-Related Reasons
Another proposed rule change that FINRA recently submitted to the SEC concerns arbitration proceedings that involve parties of advanced age or who have health conditions that may require a more expedited process. The text of the proposed change states, “FINRA believes that it would protect investors and the public interest to materially shorten case processing times for those parties who may be unable to meaningfully participate in lengthy arbitration because of their age or health condition.” These amendments would “establish shortened case-processing deadlines for the parties, including the time to respond to discovery deadlines, and provide direction to arbitrators regarding how quickly the proceeding should be completed.” Currently, the SEC is deciding whether to approve or disapprove the proposed rule change, with the official decision anticipated within the next few months.
Discuss Your Concerns With a Respected and Experienced Securities Law Attorney Today
When it comes to protecting your professional reputation, you want to know that the attorney you work with has the experience and knowledge necessary to help you achieve your desired outcome. As a certified mediator and FINRA-certified arbitrator, Tosh Grebenick has successfully defended professionals in the financial and securities industries from customer complaints and sought expungements of wrongful complaints. Now’s the time to explore your options for keeping your professional reputation as strong as possible.
Keeping up with the latest FINRA rule changes can be difficult. That’s why Judex Law, LLC, is committed to providing financial advisors with exceptional and effective legal guidance with any number of compliance or regulatory issues. If you have questions about the FINRA expungement request process, please contact our office at (303) 523-4022 to discuss your options with an experienced and friendly securities law attorney.
