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 in 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.