By Robert Conca, Partner, and Aurora Gallardo, Law Clerk of Shustak Reynolds & Partners, P.C. posted on Friday, February 4, 2022.

Robert D. Conca

Partner

Location: San Diego, California
Phone: (619) 696-9500 (Ext. 121)
Email: [email protected]

Changes to broker expungements in arbitration seemed imminent when FINRA first proposed new rule changes of the expungement process to the SEC for approval. However, on May 28, 2021, FINRA temporarily withdrew a proposal for modifying the expungement process. [1] Fast forward to January 19, 2022, FINRA president and CEO Robert Cook revisits this topic of changing the expungement process.

During the January 19, 2022, webinar with SIFMA, Mr. Cook outlined FINRA’s goals for 2022.[2] Among these goals, amendments to broker expungements in FINRA’s arbitration forum were at the top of the list. FINRA plans to release a white paper providing data and statistical analysis regarding expungements, including alternative approaches to removing client complaints from a broker’s Central Registration Depository record. [3]

Mr. Cook stated, “We think these amendments would help provide greater confidence that expungements are only happening in accordance with the kind of limited circumstances identified in our rules, when the CRD information is clearly inaccurate.” Mr. Cook also noted that this process will take time.[4]

Further, FINRA plans to propose amendments to Rule 4111, or “high-risk regime,” allowing FINRA to restrict broker’s activities who are proven to be repeat violators.[5] A possible amendment would require broker-dealers to disclose their restricted status on BrokerCheck if the broker is a repeat offender.[6]

While these proposed changes to the expungement process are not in effect, brokers and customers must be aware of how these changes can affect them. If you are interested in learning more about the expungement process, contact Shustak Reynolds today for a confidential and complimentary consultation to discuss your options.

Shustak Reynolds & Partners, P.C. focuses its practice on securities and financial services law and complex business disputes.
We represent many broker-dealers, registered representatives, investment advisors, investors, and businesses.
Attorney Robert D. Conca can be reached in the firm’s San Diego office at (619) 696-9500.

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