When financial advisors have suffered an inaccurate or outright false disclosure published on their CRD or BrokerCheck records, they have the right to request an expungement of this meritless claim. However, both the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) are taking steps to tighten this process and make it more difficult for advisors to defend their professional reputations. Here’s what you need to know about the current efforts to limit expungement requests and how these actions could impact your future.
The Current Expungement Request Process
Currently, you can initiate an expungement request via FINRA’s arbitration forum. A panel of independent arbitrators will assess your request and determine whether to recommend expungement. If the panel grants your request, you must obtain an order from a court of “competent jurisdiction” confirming this award, which FINRA will receive and honor. However, according to FINRA’s own data, only 4 percent of all disclosures have been removed within the last five years. Of the claims to pursue expungements, between 60 to 70 percent are successful.
Impending Changes to the Expungement Request Process
One of FINRA’s top priorities is to “provide additional safeguards for ensuring that information in the CRD system and disclosed through BrokerCheck is accurate and complete.” FINRA has proposed imposing strict time limits within which brokers may pursue an expungement request, creating a roster of specialized arbitrators to oversee expungement requests, prohibiting brokers who have withdrawn an expungement request from refiling the request at a later date, requiring the broker requesting expungement to appear in person at the hearing, and other significant changes. Ultimately, FINRA aims to make expungements as rare as possible, leaving brokers and firms vulnerable to unfair disclosures and reputational damage.
How a Securities Law Attorney Can Help
If you’ve been subjected to an unfair or baseless disclosure, consider enlisting the guidance of an experienced securities law advisor as soon as possible. While the expungement request process may seem daunting, your attorney will advise you on the most strategic course of action to obtain an equitable outcome. Don’t let inaccurate disclosures damage your professional reputation—reach out to a trusted attorney today to discuss your options.
Learn more about pursuing an expungement request by calling Judex Law LLC today at (303) 523-4022 and discussing your options with a knowledgeable securities law attorney.