SEC Approves FINRA Rule To Limit Expungement

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SEC Approves FINRA Rule To Limit Expungement

The SEC approved a new FINRA rule that will make it hard for brokers to delete customer complaints from their records in arbitration cases. Rule 2081 will prevent brokers from making settlements with customers requiring the claimant to accept expungement of the case from the broker’s public record. The goal of the new rule is to ensure that brokers cannot conceal customer complaints in run-of-the-mill cases but only more extreme cases.

According to the Public Investors Arbitration Bar Association, expungement requests were granted in 89% of cases resolved by stipulated awards or settlement between 2007 and 2009. That number has since moved up to 96.9% from May 2009 to the end of 2011.

The SEC has stated that arbitrators have granted expungement too often and that it wants accurate and complete information to be available to the public.

Many people, however, believe that the rule is not strong enough, pointing out that brokers would still be able to expunge legitimate complaints once the rule was in place as clients typically do not return to oppose expungement because it’s an ordeal not worth their hassle.

If you or someone you know has lost money as a result of an investment, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies.

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