Scarinci Hollenbeck, LLC
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Author: Scarinci Hollenbeck, LLC
Date: October 26, 2022
The Firm
201-896-4100 info@sh-law.comIf you have customer complaints or adverse disclosures reported on your FINRA Central Registration Depository (CRD) against you, those CRD disclosures can seriously hurt your reputation in the securities industry. FINRA CRD complaints may involve claims of sales practice violations, forgery, theft, or misappropriation or conversion of funds. In this article, we take a look at the proposed new changes to the FINRA Rule 2080 Expungement Process.
FINRA’s Central Registration Depository (CRD) covers all the registration, qualification, employment, and disclosure records of broker-dealer firms, offices, and financial service professionals with a securities license. It also includes publicly accessible information about any customer disputes on your record.
Disputes or misconduct claims can severely damage your firm and professional name. Of course, when these disputes are inaccurate or simply not true, you want to set the record straight. FINRA Rule 2080 allows you to do so by petitioning for expungement.
You can petition FINRA for expungement after one of the following happens:
However, you must follow the expungement process properly to get a successful result. This can get complicated – and FINRA has proposed new rule changes with the SEC.
Under Rule 2080, expungement is an extraordinary remedy to remove inaccurate customer dispute information from the CRD system. Rule 2080 applies only to customer-related information, not industry disputes between firms (although the standards for intra-industry disputes are substantially identical). A FINRA expungement could target customer complaints, firm U5 disclosures, arbitration awards, or civil litigation disclosures.
How do you get a waiver? You can submit a waiver request to FINRA along with copies of all the documents relevant to the expungement – the settlement agreement, arbitration award, statement of claim, etc. An experienced attorney can help you put together a complete request with all the necessary documentation to get you the best chance of approval.
FINRA grants expungement requests if you can prove one of the following:
When determining whether to grant a waiver in the scenario above, FINRA will decide whether the judicial or arbitral findings for expungement meet the same standards. This process could involve document production requests or live evidentiary hearings to conclude.
In July 2022, FINRA proposed the following rule changes under SEC Rule 19b-4:
These are just proposed rules at this point – they have yet to go through the process of approval. By the time the proposals get codified into law, they may shift and change. It’s important to keep an eye on these changes if you’re seeking expungement.
Securities litigation and dispute resolution make up a niche and nuanced area of law. Administrative proceedings for agencies like FINRA come with a number of idiosyncratic rules and regulations that require a deft hand and familiarity with securities rules and regulations to navigate properly. In the securities world, you must protect your reputation – and Rule 2080 expungement does just that.
Click here to contact the Scarinci Hollenbeck Law team now about your FINRA expungement questions.
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