cnbc.com (The New York Times) (October 16, 2013 5:11 pm) --  A report released on Wednesday by an association of lawyers who represent aggrieved investors suggests that Wall Street brokers were almost always successful when they asked to have black marks erased from their records after settling a dispute with a customer.

The Financial Industry Regulatory Authority, the private corporation that is the brokerage industry's self-financed policing arm, has long provided a public database, known as BrokerCheck, to expose some of the bad behaviors of Wall Street. Investors often rely on the organization's database as a repository of red flags.

In recent years, however, more and more brokers have been seeking to wipe their slates clean by seeking "expungements," or the deletion of negative records or other problems.

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Brokers who asked arbitrators to recommend expungement got approval in 96.9 percent of cases that were settled from May 18, 2009 to Dec. 31, 2011, the lawyers' group, the Public Investors Arbitration Bar Association, said in the report.

Such requests are most frequently made after a customer and a broker or firm have reached a settlement before a hearing occurs.

Finra has said that expungement is supposed to be an "extraordinary" remedy, but the report shows that such grants are made routinely.

The industry's regulatory body is trying to address the issue. On Monday, the regulator e-mailed a notice to arbitrators, advising them that information about a broker "should be expunged only when it has no meaningful investor protection or regulatory value." Finra advised arbitrators to examine brokers' records to see if they had had previous problems with customers before granting expungement, and to explain their reasons for any deletions.

Michelle Ong, a Finra spokeswoman, said the regulator had not seen the report and thus could not comment on it.

Some arbitrators have set up their own rules to evaluate expungement requests rather than wait for guidance from the regulator.

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On Aug. 15, Paul R. Meyer, a Finra arbitrator in Portland, Ore., wrote that his panel would disregard an affidavit from a customer who supported an expungement because the case had settled for "substantial" money, and expungement was not "an appropriate subject for negotiation."

Although the panel wound up granting the request, the members insisted that the broker appear in person and provide a detailed explanation of why she believed she deserved the deletion.

The Fordham Journal of Corporate and Financial Law is to publish an article in November about expungement, written by Seth E. Lipner, a professor of law at the Zicklin School of Business at Baruch College.

Mr. Lipner, who represents investors in cases against brokers, looked at 205 requests from Jan. 1 to July 31 this year to remove information from brokers' records after a settlement had been reached. Of those, 192 were granted, he said in an interview.