Regulatory Notice 08-79

SEC Approves Rules Establishing Procedures for Arbitrators Considering Expungement Requests; Effective Date: January 26, 2009

Executive Summary

Effective January 26, 2009, FINRA will implement new procedures for arbitrators to follow when considering requests for expungement relief under NASD Rule 2130. The SEC approved new FINRA Rule 12805 of the Code of Arbitration Procedure for Customer Disputes and new FINRA Rule 13805 of the Code of Arbitration Procedure for Industry Disputes.1 Accordingly, arbitrators considering a request for expungement relief under Rule 2130 are required to:

  • Hold a recorded hearing session by telephone or in person;
  • In cases involving a settlement, review the settlement documents to examine the amount paid to any party and any other terms and conditions of the settlement;
  • Provide a brief written explanation of the reasons for ordering expungement; and
  • Assess forum fees for hearing sessions held solely for the purpose of considering expungement against the parties requesting the relief.

The text of Rules 12805 and 13805 is set forth in Attachment A. The rules apply to expungement orders issued by arbitrators on or after January 26, 2009.

1 Exchange Act Release No. 58886 (October 30, 2008), 73 Federal Register 66086 (November 6, 2008) (File No. SR-FINRA-2008-010).