All broker and investment advisor records are now public through the FINRA Broker Check at FINRA, and so, it is extremely important to protect your reputation. It is unlikely that you will gather many new clients if they find negative comments about you in such a public record. The filing of a public complaint may also trigger Registration Problems with state agencies. If a customer files a false claim, a claim that is clearly erroneous, or a claim about a transaction in which you were never involved, then you have the right to have that negative information expunged from the Central Depository Record (CRD). When a complaint arises out of a defective structured product designed by your employer, you may seek an expungement of that claim because it is not a sales practice violation, forgery, theft, misappropriation or conversion of funds. In order to do so, you need an attorney experienced in not only FINRA arbitration proceedings but one who has handled state court litigation matters since it is a two-step process in both forums. The attorneys at the Law Offices of Robert Wayne Pearce, P.A. have been helping brokers and financial advisors nationwide clear their name through expungement proceedings from our Boca Raton, Florida offices.Attorney Pearce Will Answer Your Questions about Expungement
Attorney Pearce has over 40 years experience handling FINRA arbitration proceedings for investors and brokers and knows the difference between valid and frivolous complaints that must be removed from a broker's record. He can answer all of your questions but some of the more frequently asked questions and answers about expungement are set forth below:
What types of information can be expunged?
The information that is typically expunged arises out of disputes between customers and member firms or their associated persons that have been reported on Forms U-4 and U-5 by the brokerage firm in response to those claims. Complaints about defective structured products may be expunged. On occasion, brokerage firms themselves publish defamatory material and engage in Form U-5 Abuse, which may be expunged.
What steps should one take to seek expungement?
If a party seeking expungement is involved in an arbitration proceeding, he or she should request expungement in his or her answer, counterclaim, or statement of claim. The arbitrators will decide whether to grant a request for expungement on the basis of one or more of the 3 standards specified in Rule 2080 of the FINRA Code of Arbitration Procedure. This rule spells out special procedural requirements relating to requests to expunge customer dispute information, including that the arbitrators hold a recorded in-person or telephonic hearing, review settlement documents, and consider the amount of payments made to any party in any other terms and conditions of settlement. If the arbitrators grant expungement relief, they are also required to briefly explain in the award the factual bases for finding that the expungement is appropriate under one or more of the Rule 2080 standards.
What are the findings that arbitrators must make for expungement?
Arbitrators have the ability to order expungement for a variety of reasons. However, if a party does not want FINRA to challenge the expungement order and waive participation in any subsequent court confirmation proceeding, the arbitrators must affirmatively find that the subject matter of the claim or the information in the CRD system meets one or more of three standards:
The claim, allegation, or information is factually impossible or clearly erroneous.
The registered person was not involved in the allegedly investment-related sales practice violation, forgery, theft, misappropriation, or conversion of funds.
The claim, allegation, or information is false.
If the arbitrators awarded expungement, what is the next step to clear the record?
First, the party seeking expungement needs to send a letter to FINRA formally requesting a waiver of any participation in any court confirmation proceeding along with the relevant documents such as the statement of claim, the answer, any settlement agreement, the arbitration award, and any other relevant documents. The staff will review the submission and either grant or deny the waiver request. If FINRA denies the waiver request, a party can still proceed with the expungement but must name FINRA as a party to the court proceeding. FINRA and State authorities can both challenge the expungement and a judge will decide whether it is in the public interest to have your record expunged.
Can a record be expunged without a court proceeding?
FINRA may expunge, without a court order, expungement directives contained in arbitration awards rendered in disputes between registered representatives and firms in which the arbitration panel states that the expungement relief is being granted because of the defamatory nature of the information; i. e., in cases involving Form U-5 Abuse.
The Law Offices of Robert Wayne Pearce, P.A. understands what is at stake in securities, commodities and investment industry expungement proceedings and constantly strives to secure the most favorable possible result. Mr. Pearce provides a complete review of your case and fully explains your legal options. The firm works to ensure that you have all of the information necessary to make a sound decision before any action is taken in your case.
For dedicated representation by a law firm with substantial experience in all kinds of securities, commodities and investment industry registration disputes, contact the firm by telephone at 561-338-0037 or toll free at 800-732-2889 or via e-mail. We may also be able to arrange a meeting with you at offices located in Boca Raton, Fort Lauderdale, Miami and West Palm Beach, Florida and elsewhere.