Examples of Expungement Orders

Arbitrators often ask for guidance in drafting appropriate expungement language. To help arbitrators with expungement orders, below are examples of the relevant portions of written explanations in awards ordering expungement under each of the three standards in Rule 2080 (with the names of the parties redacted). Although each case is different, arbitrators may find it useful to see how previous panels have drafted expungement orders.  Arbitrators should contact their case administrator if they have any questions about expungement orders.


Standard 1 of Rule 2080: the claim, allegation or information is factually impossible or clearly erroneous.

 

The great preponderance of the evidence presented shows that Claimant visited [Firm] and its broker [Associated Person] in or around December 1999, not in December 2001 as alleged by Claimant. Thus, Claimant’s version of the facts is clearly erroneous. Also, documents produced by Respondents as exhibits to their pleading clearly show Claimant’s failed attempt in 1999 (not 2001) to open an account with Respondents. Claimant would have the Arbitrator believe that Respondents’ documents, some prepared in the Bardstown, Ky. branch office of [Firm] and some generated or prepared at the company headquarters, were improperly or fraudulently back dated to reflect a 1999 date rather than the 2001 date asserted by Claimant. Further, Claimant provides no evidence besides her oral testimony that the events alleged in the claim occurred in 2001, and not (as documentary evidence clearly shows) in 1999. The Arbitrator finds Claimant’s version of the events not credible. The Arbitrator finds Claimant's allegations and version of events not supported by the evidence, and therefore, factually impossible. For these reasons, expungement of [Associated Person's] record is appropriate. (FINRA Case No. 11-01822)1

 

Standard 2 of Rule 2080: the registered person was not involved in the alleged investment-related sales practice violation, forgery, theft, misappropriation or conversion of funds.

 

Evidence was presented at the expungement hearing that led the Panel to believe that [Associated Person 1] was not involved in the alleged sales practice violation that was the subject of the filing of the Statement of Claim by Claimants. The account that [Associated Person 1] had with Claimants had been closed for over a year before Claimants entered into transactions with [Associated Person 2] and [Associated Person 1] had no knowledge that Claimants were even doing business with [Associated Person 2]. Therefore, [Associated Person 1] was not involved in the alleged investment-related sales practice violation, forgery, theft, misappropriation, or conversion of funds. The Panel reviewed the settlement agreement, and considered the amounts paid to any party and considered any other relevant terms and conditions of settlement. The Panel concluded that [Associated Person 1] should be granted expungement of the charges set forth by Claimants. (FINRA Case No. 10-02298)

 

Standard 3 of Rule 2080: the claim, allegation or information is false.

 

The two issues raised by Claimant were that of IRA custodial fees and illiquidity of investment. Claimant’s signature and/or initials were present on papers making both of these issues very clear. While Claimant might have been unhappy, there was no wrongdoing on the part of [Associated Person]. In fact, [Associated Person] went out of her way to fix problems created by Claimant. [Associated Person’s] Exhibit #2(6(c)) acknowledges there is no public market for this investment as does [Associated Person’s] Exhibit #3. [Associated Person’s] Exhibit #4 outlines custodial fees. Claimant agrees that he read and signed these documents. (FINRA Case No. 10-04839)

 


 

1 Parties, as well as other users, can access FINRA awards, including those ordering expungement, through FINRA’s Arbitration Awards Online database. Users can search terms such as “expungement” and “Rule 2130” for expungement awards issued prior to August 17, 2009 and “Rule 2080” for expungement awards issued on and after August 17, 2009. Users can also narrow their search using a set of date ranges for the award.