The financial industry has seen a great deal of changes to the industry in recent years. Both the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) have taken steps to amend several rules and procedures with the goal of protecting the investing public. One of the most notable updates announced by FINRA concerns changes to the process by which the expungement of customer dispute information occurs. Under the revised rules, advisers who are seeking to have customer complaints that are over two years old expunged from the Central Registration Depository (CRD) must file before October 2025. This strict deadline is essential to recognize, as FINRA will not allow expungement requests to be filed after the October deadline. Moreover, FINRA’s recent implementation of non-negotiable deadlines carries serious consequences for investment advisers who are hoping to protect their professional reputations.
Customer complaints can have a significant impact on a registered investment adviser, especially if the complaint itself is inaccurate, baseless, or downright false. Since FINRA’s goal is to protect market integrity and look out for the public’s best interests, any complaint—regardless of merit or accuracy—is entered into the CRD and made visible to the public via BrokerCheck. If you are struggling with an unfair complaint, it’s essential that you enlist the guidance of a highly experienced and knowledgeable regulatory compliance attorney who can help you identify the most strategic course of action. Let’s take a closer look at FINRA’s amended expungement filing time limits and why working with a skilled and supportive legal advocate can help to protect your professional reputation and career.
The Time-Sensitive Nature of Expungement
FINRA adopted several amendments in 2023, one of which was Regulation 23-12. Under these new rules, there are much stricter time limits under which an investment adviser may file an expungement request. For instance, the majority of older disputes (i.e., those that are more than two years old) will no longer be eligible for expungement relief after October2025. It’s important to recognize how the FINRA expungement deadline applies to straight-in requests. In cases where the complaint resulted in litigation, FINRA requires:
An expungement request to be filed within two years from the date on which the customer-initiated arbitration or civil litigation closed.
If the complaint did not lead to arbitration or litigation, FINRA extends the expungement request filing window to three years from the date on which the customer complaint was reported in the CRD system.
However, it’s worth noting that FINRA established a transitional deadline for older settled complaints, allowing those with customer complaints that were settled more than two years before the amended rules took effect (i.e., October 2023) to file straight-in expungement requests until October 2025. As an investment adviser, it’s essential that you keep track of critical dates like the close of an arbitration proceeding and the date that a complaint was reported to the CRD.
What Happens If You Wait Too Long to File an Expungement Request
Under FINRA’s amended expungement request timeline, there are serious consequences for missing these critical windows. Failing to submit an expungement request by the strict deadline means that FINRA’s arbitration forum will deny your request. As a result, the complaint or disclosure will remain permanently visible, both in the CRD and on your BrokerCheck profile. Without being able to have this information expunged, there’s the potential for serious and lasting professional consequences, such as reputational damage, licensing issues, and client distrust. When you work with a highly experienced and trusted regulation compliance lawyer, you can review the details of your situation and evaluate your options for keeping your future as bright and secure as possible.
Steps to Take in the Immediate Future
Now that you have a better understanding of the looming deadlines and strict timelines governing expungement request filings, it’s essential that you take swift and immediate action. You can begin by reviewing any CRD disclosures to determine whether they are eligible for expungement under the amended time limits. Next, reach out to a trusted and dedicated regulatory compliance attorney for the specific guidance you need to make informed decisions with greater understanding and confidence. Even if you are not quite sure that you qualify for expungement relief, it’s worth taking proactive steps that can set you up for success once you and your attorney decide whether to move forward.
FAQs About CRD Expungement Rules and Requests
In light of these recently enacted amendments, it can be difficult to understand the nuances of these rules and how they may affect you as an investment adviser. Below are some brief answers to some of the most common questions about the FINRA expungement request process to help get you started.
What Are the Key Deadlines Under the New FINRA Expungement Rules?
Under FINRA’s new rules, straight-in expungement requests for cases involving customer-initiated arbitration or litigation must be filed within two years of the closing date of the legal proceeding. Cases where there was no arbitration or litigation accompanying the customer complaint have three years from the date on which the complaint was reported in the CRD in which to file an expungement request.
Is There Any Flexibility if I Miss the Deadline?
Unfortunately, no. FINRA will not make exceptions for those who miss these critical deadlines. Taking swift and timely action is the best way to ensure that your expungement request is filed within the acceptable window.
Why is it Important to Act Before the Clock Runs Out?
Missing the deadlines means that FINRA will deny your expungement request. This means that the complaint will remain visible in the CRD and on BrokerCheck permanently, leading to professional issues like reputational damage, client distrust, and other adverse consequences.
Who Should I Talk to About Expungement Eligibility and Timing?
Your best bet for sound guidance during this challenging time is to enlist the help of a highly experienced and knowledgeable regulatory compliance attorney. Get started right away.
Learn More About Investment Adviser Expungement Requests Today
If you have questions about filing an expungement request or you simply want to learn more about the process, the dedicated and highly experienced legal team at Jacko Law Group, PC, is here to help. We encourage you to contact our San Diego, California office today at (619) 298-2880 to get started with a knowledgeable and trusted regulatory compliance attorney.
Jacko Law Group provides tailored legal services and effective strategies for success, delivering exemplary solutions to complex legal and regulatory challenges to ensure that both business efforts and compliance obligations are satisfied.
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