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FINRA Revives Plan to Create Expungement Arbitrator Roster

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The Financial Industry Regulatory Authority’s Board said Friday that it has approved amendments to a rule establishing a special roster of arbitrators for expungement requests.

FINRA withdrew the proposal from the Securities and Exchange Commission last May so that it could think about revising the rule.

The newly approved proposal includes amendments to the previous plan. Those changes won’t be known, however, until the proposal is filed with the SEC.

There is “no date on when that will happen yet,” a FINRA spokesperson said.

FINRA said that its special roster proposal would address “a number of significant issues” related to the expungement process.

The Public Investors Advocate Bar Association, or PIABA, has complained that the previous plan to create a roster of arbitrators with enhanced training and experience to decide whether to expunge customer complaints would not solve the problem of brokers gaming BrokerCheck.

Requests by brokers to have black marks removed from their records are granted 78% of the time, according to FINRA. The regulator says it’s committed to reforming the expungement process “so that it operates as intended — as a remedy that is appropriate only in limited circumstances.”


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