SEC Approves FINRA’s More Restrictive CRD Expungement Rules

Posted on April 19th, 2023 at 1:07 PM
SEC Approves FINRA’s More Restrictive CRD Expungement Rules

From the desk of Jim Eccleston at Eccleston Law 

The Securities and Exchange Commission (SEC) has approved a new Financial Industry Regulatory Authority (FINRA) rule that makes it more difficult for financial advisors to expunge disputes and misconduct from their records.

The newly approved rule arranges a special roster of arbitrators to hear “straight-in expungement” requests, which presents FINRA with inherent challenges since those requests are granted more often than other expungement petitions. According to FINRA, a “straight-in expungement” occurs when an advisor files an arbitration claim, technically against his or her current or former firm requesting expungement of the client dispute. The FA’s current or former firm seldom objects and typically participates in a pro forma manner.

The new rule will ensure that clients and state regulators are informed of expungement requests while advisors will be restricted from filing a straight-in expungement request more than three years after the date the client complaint initially was reported. FINRA’s new rule additionally requires advisors to appear in person or by video conference at the expungement hearing and prohibits phone-based appearances.

 

Eccleston Law LLC represents financial advisors and investors nationwide in securities, employment, transition, regulatory and disciplinary matters.

Tags: eccleston, eccleston law

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