FINRA’s expungement process and how investors whose complaint is the subject of an expungement can potentially receive free representation from an attorney through the PIABA Foundation’s pro bono legal program.
What is FINRA?
The Financial Industry Regulatory Authority (“FINRA") works with state securities regulators to maintain a database, known as the Central Registration Depository (“CRD”), of information on individuals working as current and former registered representatives in the brokerage industry. Complaints by investors are included in the CRD database. Some of the information from a broker’s CRD records, including some customer complaints, can be accessed by the public through FINRA’s BrokerCheck tool on FINRA’s website. An actual CRD can be obtained from some state securities regulators.
FINRA as well as state and federal securities regulators actively encourage investors to use FINRA’s BrokerCheck tool and look for customer complaints when deciding whether to hire a particular broker. FINRA recognizes that it is important that the information on CRD, and by extension BrokerCheck, be complete and accurate. As a result, the information contained in the CRD database provides critical educational information about brokers that helps investors make informed decisions about who they allow to manage their life savings. Therefore, it is important from a public policy and investor education standpoint to preserve the integrity of the CRD database.
What does expungement mean?
Expungement is a process that is administered by FINRA through its arbitration forum. In order to remove customer complaint information from the CRD record, a broker must request that the information be expunged. FINRA recognizes that customer complaints should be removed only in extraordinary circumstances. A broker can request expungement during the actual customer arbitration if one is filed. A broker also may request expungement in a separate case, after the conclusion of the initial arbitration claim. If an arbitration panel grants the request and the broker obtains court confirmation of the arbitration award, the information is removed from the CRD and BrokerCheck. FINRA instructs arbitrators to grant the extraordinary remedy of expungement only after they make an affirmative finding that:
- (A) the claim, allegation or information is factually impossible or clearly erroneous;
- (B) the registered person was not involved in the alleged investment-related sales practice violation, forgery, theft, misappropriation or conversion of funds; or
- (C) the claim, allegation or information is false.
How does expungement of my complaint impact me?
If your complaint is expunged, it will no longer be included on the brokers’ complaint history that is publicly available through FINRA’s BrokerCheck tool, which is used by other investors to select financial professional to manage their investments.
Why did I receive a notice from an attorney and/or FINRA about expungement?
You received notice because your complaint against your broker is the subject of an expungement arbitration.
What is the PIABA Foundation?
The PIABA Foundation is a 501(c)(3) charitable organization that was formed in 2012 by attorneys who are devoted to representing investors in disputes with brokers and brokerage firms in FINRA arbitrations. The Foundation’s mission is to promote investor protection through investor education.
What is the PIABA Foundation’s pro bono program?
Since 2019, the PIABA Foundation released multiple studies analyzing the problems associated with expungement requests made by brokers and created a program that coordinates with attorneys represent consumers who wish to participate and oppose expungement requests pro bono.
Importantly, work done by the PIABA Foundation resulted in significant changes to FINRA’s expungement arbitration rules and procedures which greatly improved protections to help ensure that expungements are granted only in extraordinary circumstances.
If you are interested in discussing your case, please contact us through our website www.piabafoundation.org or call 855-410-2444.