Regulatory Outlook | 04.28.22
FINRA Revives Expungement Proposal That Died After Pushback
The Financial Industry Regulatory Authority (FINRA) has resuscitated a broker expungement arbitration reform proposal as part of a "two-track approach" that would have the SEC adopt the previously defeated rule. The proposal would organize a team of arbitrators randomly chosen to oversee cases filed by financial advisors seeking expungement of client complaints and give more notice to state regulators about each proceeding. FINRA said its 2020 increase to the cost of filing an expungement claim has reduced the volume "straight-in" claims by brokers seeking only the removal of client complaints, yet at least 4,500 of 5,365 such cases resulting in awards between January 2016 and December 2021 sanctioned expungement.
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