Podcast Center
Video Center
Webcasts
Resource Center
Events
By 
March 22, 2019 at 02:25 PM
Sen. Elizabeth Warren, D-Mass., told Financial Industry Regulatory Authority CEO Robert Cook on Thursday that the broker-dealer self-regulator must ensure that any revamped broker expungement rules end up being tougher, as broker expungements “are often associated with broker misconduct” and recidivism.
As FINRA continues to consider changes to its expungement rules, Warren, who’s running for president, pointed to recent research “highlighting the need for smart broker expungement rules that ensure the availability of complete and transparent information about brokers.”
In her Thursday letter to Cook, Warren cited a recent Stanford analysis of FINRA expungement records, which found that “expungement attempts are most often successful yet are often associated with wrongdoing.”
Of the roughly 6,700 expungement attempts that took place between 2007 and 2016, 70% were successful, the study found. Said Warren: The study stated that “Successful … and unsuccessful expungement attempts” by brokers “are a significant predictor of future misconduct,” and that “successful expungements increase recidivism.”
The study “suggests that FINRA’s current method of assessing expungement requests — which approves the vast majority of expungement requests — is failing to safeguard information needed for investor protection,” said Warren in her letter. “Given FINRA’s crucial role in promoting safe markets and regulating the securities industry, it is of utmost importance that the organization consider the impact of broker expungement on the future misconduct of industry brokers.”
