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Finra Complaint Expungements Are Getting Wordier

April 12, 2017

Finra arbitrator explanations are getting more detailed when they “expunge” client complaints from a broker’s record, InvestmentNews reports.

Using data gleaned from the Securities Arbitration Commentator, a securities-arbitration tracker based in Maplewood, N.J., InvestmentNews found “the number of explained expungements in cases where the parties reached a settlement has increased to 22% through the first quarter of 2017” from 15% in last year’s first quarter.

And there are signs of “greater transparency” in the expungement decisions for recent Finra cases, says InvestmentNews, with the length of explanations ranging from a couple of terse but illustrative paragraphs to six full pages.

Removing customer complaints about brokers from Finra records — usually accessed via Finra’s BrokerCheck online database — is a touchy subject, writes InvestmentNews. Consumer advocates say complaints help prospects vet brokers.

On the other side, many brokers say disproven complaints have no place on permanent records.

The apparent rise in the number of expungements and the greater detail provided for them stem from Finra Rule 2080, which was adopted about 36 months ago.

Before it took force, Finra told arbitrators to “ensure that the explanation is complete and is not solely a recitation of one of the Rule 2080 grounds or language provided in the expungement request,” InvestmentNews reports.

By Thomas Coyle
  • To read the InvestmentNews article cited in this story, click here.