Financial Planning (November 18, 2022) - Brokers have until Dec. 7 to comment on an amended rule that would make it harder for them to have customer complaints expunged from the online database BrokerCheck and other records.
FINRA calls expungement an "extraordinary remedy, " to be used when customer complaints are "clearly inaccurate," and notes that only 4% of the 35,000 customer complaints that were entered into its records between 2015 and 2020 were removed. But a May 2021 study from investor advocacy group Public Investors Advocate Bar Association found that FINRA arbitrators were granting it in 90% of the cases that came before them. In other words, according to PIABA, when people go to the trouble of seeking expungement, they have a strong chance of success.
FINRA's recent proposed amendment seeks to make expungement an even more extraordinary remedy by preventing anyone found liable in a customer complaint case from even seeking it. The proposal would also require that customers who have submitted complaints or other professionals be invited to any hearing on expungement proposals; and it would prohibit the arbitration panels charged with granting or rejecting expungement requests from giving any "evidentiary weight" to a customer's failure to appear at a hearing.