Professionals in the financial industry rely on their reputations to cultivate public trust. Unfortunately, even an inaccurate, exaggerated, or downright false complaint made by a disgruntled client can damage your reputation and jeopardize your livelihood. BrokerCheck, which is described as “a free tool to research the background and experience of financial brokers, advisers, and firms,” is a valuable and frequently used database for potential clients to determine whether to entrust a financial advisor with their valuable financial resources. As a prospective client views your profile, any information that could be considered negative—even if it’s untrue or inaccurate—can prompt them to look elsewhere for a more trustworthy financial professional. As the agency behind BrokerCheck, the Financial Industry Regulatory Authority (FINRA) “pursues its mission of promoting investor protection and ensuring market integrity in many ways.” For financial advisors, this means that FINRA takes any customer complaint seriously and allows it to appear on BrokerCheck without investigating its validity.
If your business or professional reputation is suffering because of a wrongful customer complaint, it’s worth discussing your concerns and exploring your options with an experienced and knowledgeable securities law attorney. Together, you can determine whether filing a FINRA expungement request can help you achieve your desired outcome. Let’s take a closer look at how the FINRA expungement process typically unfolds and some of the steps you can take to navigate this process with greater certainty and confidence.
Removing a Complaint From BrokerCheck
First, it’s important to recognize the purpose of BrokerCheck. As part of FINRA’s mission to create “a safer environment for investors in today’s complex investment landscape,” the entity allows potential investors to access relevant information about the securities firms and professionals before they entrust them with their financial assets. FINRA uses information from the Central Registration Depository (CRD), which includes complaints and disclosures lodged by investors. In order to have unfair or inaccurate customer dispute information removed from your BrokerCheck profile, it must first be removed from the CRD. FINRA will only honor an expungement request in two ways: (1) If FINRA receives a court order that directs the expungement of the customer dispute information; or (2) If a court confirms an arbitration award that grants the expungement relief. Financial advisors who are wondering how to expunge customer dispute information from Brokercheck can seek such relief by moving through FINRA’s expungement process. Although navigating this process does not require the individual seeking expungement relief to hire an attorney, taking this step is highly recommended to ensure that you understand your legal rights and options at every stage of the process.
Filing a FINRA Expungement Request
The FINRA expungement request process can seem daunting at first. However, with a highly qualified and caring securities law attorney by your side, you can prepare for the upcoming steps and feel more confident about what to expect from the process. Essentially, an expungement request will be overseen and decided by a panel of three specially-trained arbitrators. It’s important to understand that the panel of arbitrators can only grant expungement relief in three specific scenarios. The narrow grounds for expungement relief include the following: “(1) The claim, allegation or information is factually impossible or clearly erroneous; (2) The associated person was not involved in the alleged investment-related sales practice violation, forgery, theft, misappropriation or conversion of funds; or (3) The claim, allegation or information is false.” As you and your securities law attorney prepare your claim, it’s essential that you identify evidence that supports one or more of the above grounds for expungement relief.
What to Expect During FINRA Arbitration
The Securities and Exchange Commission (SEC) recently approved several revised rule changes to FINRA’s arbitration process. These amendments have led to a notable decrease in the number of new case filings, as they impose stricter time limits and other requirements that make it more difficult for financial advisors and member firms to seek expungement relief. So, what do these new requirements include? Below are just a few of the recently adopted considerations that will affect the course of your expungement relief request.
The Panel of Three Specialized Arbitrators
As mentioned above, every straight-in request for expungement relief must now be handled by a panel of three arbitrators that are “randomly selected from the Special Arbitrator Roster to decide the expungement request.” Moreover, the parties involved in the arbitration “cannot agree to fewer than three arbitrators to decide the expungement request,” and they are “prohibited from ranking and striking the arbitrators, stipulating to an arbitrator’s removal, or stipulating to the use of pre-selected arbitrators.” In other words, the parties will not have a say in who will oversee and determine the outcome of the expungement request. In order to grant expungement relief, the three arbitrators must “unanimously agree to award expungement based only on the narrow grounds specified in the rules.” As you and your securities law attorney prepare for the upcoming process, it’s essential that you understand how these new rules could affect your request.
Stricter Time Limits for Expungement Requests
FINRA’s newly adopted rules impose stricter time limits during which a financial advisor may seek an expungement request. The Department of Resolution Services (DRS) will only hear expungement requests that are made within “two years after the close of the customer arbitration or civil litigation associated with the customer dispute information” or within “three years after the date the customer complaint was initially reported in CRD.” If an expungement request is not filed within these windows, DRS will likely deny the request. With these narrower time limits in mind, it’s best to work with an experienced and friendly securities lawyer who can help you take prompt action to maximize your chances of obtaining your desired outcome.
Get Started With Judex Law, LLC, Today
Don’t let an inaccurate or baseless customer complaint tarnish your reputation as a financial advisor. As a certified mediator and FINRA-certified arbitrator, attorney Tosh Grebenik has defended professionals in the financial and securities industries from customer complaints and sought expungements of wrongful complaints. Contact Judex Law, LLC, today at (303) 523-4022 to learn more about your options for filing a FINRA expungement request and defending your professional reputation and livelihood.
