Investment Professionals

SEC Should Further Study Procedures Regarding Expungement of Brokers’ Arbitration Record

FINRA has proposed changes to strengthen the procedures for handling of requests by brokers to expunge arbitration records from the central database regulators maintain of their disciplinary records. In light of concerns that state securities regulators and attorneys who specialize in representing investors have raised about the adequacy of the proposed changes, CFA wrote to the Securities and Exchange Commission (SEC) urging the agency to hold a hearing on the issue as part of its consideration of the FINRA proposal. “Ultimately, we agree with those who have suggested that expungement cannot reasonably be delegated to arbitrators and is instead more appropriately treated as a regulatory decision. As such, it is better handled by the regulators with a direct stake in maintaining the integrity of the database. We therefore urge the Commission to hold a hearing on these issues before acting on the FINRA proposal,” the CFA letter states.