In a report released today, the Public Investors Arbitration Bar Association
stated that despite reforms by FINRA, brokers still have a high success
rate when seeking expungement. Based on a recent study analyzing arbitration
cases from January 1, 2012 to December, 31, 2014, of the 460 cases that
resulted in settlements or stipulated awards, 87.8% were granted expungement
when it was sought.
The study was an extension of the previous review conducted two years ago
in which the Public Investors Arbitration Bar Association surveyed cases
settled between January 1, 2007 and May 18, 2009. In the former study,
it was noted that out of every 10 settled cases, nine were granted expungement.
It was after this study that FINRA launched an initiative for increased
training and guidance for arbitrators on situations related to the expungement
process and approved a rule prohibiting expungement-conditioned arbitration
FINRA has taken steps in recent years in hopes of improving the process
in which expungement is determined. This has involved emphasis regarding
expungement as an “extraordinary remedy.” If a broker is granted
expungement, it may send false impression of the broker to investors as
the broker is cleared of any alleged wrongdoing. This means investors
may be unable to get the full amount of information necessary regarding
the integrity of the broker with whom they work.
Another step proposed by the lawyers’ group to improve the process
was to include the additional review of broker requests by a FINRA attorney.
Other proposed steps include notification to state regulators of the expungement
requests and increase arbitrator training.
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investments are safe. Call our securities fraud lawyers for a
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