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FINRA Announces Enhancements to Advisor Expungement Process

Posted on August 22nd, 2023 at 1:43 PM
FINRA Announces Enhancements to Advisor Expungement Process

From the desk of Jim Eccleston at ÍøÆØ³Ô¹Ï 

The Financial Industry Regulatory Authority (FINRA) has adopted several reforms to tighten the expungement process and has set an implementation date of October 16.

According to AdvisorHub, the reforms are a component of a rulemaking package that the Securities and Exchange Commission (SEC) approved in April, which has been in development for three years. The changes include a mandate for expungement cases to be unanimously decided by a three-member panel of public arbitrators with specialized "enhanced expungement training" replacing the current option of a sole arbitrator.

Additionally, according to the rules, advisors' expungement requests will be limited to two years after the closing of an arbitration or litigation or three years if the complaint did not result in a formal proceeding. The amendments also mandate that advisors notify state securities regulators of all expungement requests and allow them to participate when attempting to clear their records.

The Public Investors Advocate Bar Association (PIABA) endorsed the final version of FINRA's proposals as a “significant improvement” to prior versions. On the other hand, some state securities regulators believe FINRA should dig deeper, including expanding the rule to prohibit expungement of any arbitrations or litigation where the advisor was found to be liable.

 

ÍøÆØ³Ô¹Ï LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law

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