- On December 14, 2017
Financial-Planning’s article, “FINRA may make it harder for brokers to erase past indiscretions” by Ann Marsh, reports the FINRA proposed changes to reign in disciplinary disclosure expungements.
FINRA has released proposed amendments to its expungement process requesting industry comments by February 5th.
Currently, advisors can expunge years’ worth of disclosures that meet requirements.
The proposed new rules would restrict expungements to a one year timeline and would create a specialized panel of arbitrators for expungement cases that would require a unanimous vote of three for the expungement to be granted.
Ann Marsh points out that FINRA and the SEC state that expungements should be an extraordinary remedy. However, the reality is that expungements were granted in 44% of cases when there wasn’t a disclosure settlement from 2012 to 2014. In cases where there were settlements, 88% of advisors still succeeded in expunging disclosures.
See FINRA’s current guidelines for expungement:
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