PIABA Study Reveals that FINRA’s Effort to Curb Broker Record-cleansing Has Not Been Met With Success

According to Public Investors Arbitration Bar Association’s (PIABA) latest report, FINRA’s efforts to curb broker expungement and clear records of misconduct have failed to reduce the number of times it occurs. According to PIABA, between, 2012-14 expungement was granted in 87.8% of cases in which it was sought .

When brokers are granted expungement for alleged wrongdoings, this record is wiped out from FINRA’s BrokerCheck and FINRA is concerned that it might cause an impression about the broker’s ethic that is misleading.

Since 2014, FINRA has increased arbitrator guidance and training and introduced rules that prohibit arbitration settlements with expungement as a condition. FINRA has sought to grant expungement as an “extraordinary remedy” only to be available is cases where the broker’s record has no value for investor protection. FINRA’S arbitration task force is considering creating a Special Arbitration Panel comprised of specially trained arbitrators to make decisions on expungement requests.

There have been several recommendations to improve broker expungement including having FINRA attorneys review broker requests. PIABA wants to simplify the process and replace it with a single standard.

Malecki Law attorneys represent both investors and brokers and have successfully helped brokers expunge records in cases of false allegations or where the broker was not involved in the transgression.