“Settling” is Not FINRA Expungement
Does “settling” a customer complaint mean the complaint is expunged from my FINRA record? Not necessarily.
Resolving a customer complaint and expunging customer dispute information are separate processes. Even when a customer acknowledges that a registered representative did nothing wrong, agrees that no further action should be taken, or agrees to settle the dispute, that agreement does not, by itself, establish grounds for expungement.
Under FINRA Rules 12805 and 13805, expungement may be feasible if:
– The claim, allegation or information is factually impossible or clearly erroneous;
– The registered person was not involved in the alleged misconduct; or
– The claim, allegation or information is false.
Key steps to pursue expungement:
– Evaluate whether the matter meets FINRA’s narrow expungement criteria.
– Address expungement during the customer arbitration or through a separate arbitration proceeding, as appropriate.
– Present evidence supporting the applicable ground for expungement.
– Obtain an arbitration award recommending expungement or pursue the required court confirmation directing expungement.
– Confirm that the expungement is reflected in CRD/BrokerCheck.
Expungement is an extraordinary remedy. Proper planning can help protect your professional record and reputation.
For assistance with FINRA expungements or if you would like to discuss your case, please contact us at 619.298.2880 or email [email protected].
Key Rule Changes that Can Affect Your Expungement
FINRA’s 2023 amendments to its expungement rules have significantly changed the process for registered representatives seeking to remove eligible customer dispute information from their CRD records. The amendments are designed to place greater emphasis on timeliness and procedural safeguards.
Key changes include:
Best Practices for Form U5
A Form U-5 disclosure can have lasting consequences long after a registered representative leaves a firm. Customer complaints, employment terminations, internal investigations, and other reportable events can become part of an individual’s Central Registration Depository (CRD) record. In addition, recent FINRA rule amendments have made expungement proceedings more rigorous by imposing strict filing deadlines, requiring hearings before specially trained arbitrators, increasing customer participation rights, and permitting greater regulatory oversight. As a result, waiting to address problematic disclosures can significantly limit available options.
To help protect your professional reputation and future career opportunities, consider the following best practices:
• Regularly review disclosure history to assess whether any reported information may be inaccurate, misleading, or otherwise eligible for expungement.
• Review Forms U-4 and U-5 for accuracy whenever employment changes occur.
• Monitor CRD records regularly to identify potentially harmful or inaccurate disclosures.
• Preserve emails, records, client communications, and other documentation that may support a future expungement request.
• Be aware of FINRA’s filing deadlines, including the new amended two-year and three-year limitations applicable to many straight-in expungement requests.
• Consult experienced legal counsel as soon as a negative or unwarranted disclosures appears to evaluate available remedies and develop a strategy.
By doing this, financial professionals can better safeguard their reputations and preserve future employment and business opportunities.
For more information or assistance, please contact us at 619.298.2880 or email [email protected].
Amandeep Kalhar is an Attorney at Jacko Law Group, PC. She focuses her practice on matters involving securities laws enforced by FINRA and SEC including arbitration proceedings and transactional supp...
