Articles Posted in Registered Representatives

In late May, FINRA issued a  press release announcing the temporary withdrawal of proposed rule changes regarding the process for obtaining expungement of customer dispute information maintained for registered representatives on WebCRD, or “BrokerCheck.”

The proposed rule changes were issued in 2017 for possible SEC approval and have previously been discussed on our blog. Since 2017, FINRA has responded to various SEC requests for additional information, and the deadline for adoption of the rule proposals has been extended. The withdrawal release cites “consultations with the SEC staff” as the basis for withdrawal of the rule proposal and concludes by restating FINRA’s commitment that it will continue to consult with, and solicit input from, the SEC and other interested parties “who share a common interest in revising” the expungement process.

Among other things the proposed rule changes included:

  • Establishing a new category of arbitrators trained and qualified to decide expungement cases, and maintaining a roster of those arbitrators who will decides such cases;
  • Eliminating the process for ranking arbitrators that are appliable to other industry and customer arbitrations;
  • Prohibiting stipulations or agreements to allow the case to be decided by fewer than three arbitrators chosen from the special panel;
  • Requiring a broker who is named in the underlying arbitration to seek expungement in that arbitration;
  • Imposing stricter time limits within which brokers may request expungement; and
  • Limiting situations in which a party to a customer dispute – such as a broker-dealer – can request expungement relief for an unnamed party, such as a registered representative of that broker-dealer.

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