Update on the FINRA Expungement Process

Ulmer & Berne LLP
Contact

Brokers will no longer be able to include $1 in damages along with their request for expungement in order for their claim to fall on the low end of FINRA’s graduated filing fee (and hearing fee) schedule. Instead of paying a $50 filing fee, brokers will now be charged $1,575 (and broker-dealers will be hit with a $3,750 processing fee and $1,900 surcharge, all for being named as a nominal respondent in the proceeding). To read more about the rule change, click here for my recent blog post.

FINRA has not yet released a regulatory notice regarding this change, but the rule is expected to go into effect later this summer. And, more proposed rule changes (outlined below) are expected to go to the SEC for approval later this year. So, any brokers who are interested in seeking expungement should consider doing so sooner rather than later.

  • There will be stricter rules about how and when brokers can request expungement, although the rules will allow an expungement request to be filed two years after the customer dispute ends (not within one year, as FINRA originally proposed).
  • Expungement requests will be heard by special panels of three arbitrators, but their decision will only need to be by majority (not unanimous, as FINRA originally proposed).
  • Brokers will be required to testify in-person or via videoconference – not telephonically (although customers will still be permitted to appear telephonically or through a written statement).

Many changes will take place in the next year and a half, particularly as the future rules regarding expungement of customer dispute information are finalized. Keep an eye out for periodic updates from us. It will be interesting to see how all of the rule changes finally play out.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ulmer & Berne LLP | Attorney Advertising

Written by:

Ulmer & Berne LLP
Contact
more
less

Ulmer & Berne LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.