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FINRA Expungement- Virtually Guaranteed in Settled Cases

By  erwin Shustak  of Shustak Reynolds & Partners, P.C. posted on Thursday, October 17, 2013.

Good news for registered reps seeking to expunge customer complaints from their CRD records. A report recently issued by PIABA, the association of lawyers who represent aggrieved investors, reveals that brokers were able to obtain the approval of arbitration panels to expunge the customer complaints from their CRD records in an astonishing 96.9 percent of cases settled from May, 2009 through December, 2011. Typically, these CRD expungement requests are made by the broker or his firm after the case was settled and the firm, not the broker, paid the settlement amount. A typical aspect of pre-hearing settlements requires the customer to agree not to oppose, and to cooperate, with the broker’s application to the Panel to expunge the complaint from his or her record. The Financial Industry Regulatory Authority (FINRA), the private corporation that is the brokerage industry’s self-financed policing arm, maintains Broker-Check and the CRD system which lists all customer complaints and other negative items about each registered representative and firm. This unusually high percentage of successful expungement requests is even more surprising since the FINRA rules list only 3 very narrow grounds for expungement: 1) The claim or allegation against the broker is factually impossible or clearly erroneous; 2) the registered person was not involved in the alleged investment related violation; and 3)the claim or allegation against the broker is false. The results of the study reveal that even with such specific, narrow grounds for expungement, crd expungement is almost universally granted by panels, on request, after the case has been settled. We have successfully handled many expungement requests. Contact us to discuss your particular situation.

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