finra

FINRA

For Release:
Contacts:

February 13, 2014
Nancy Condon (202) 253-6467
Michelle Ong (202) 728-8464

 

 

FINRA Board Approves Rule Prohibiting Conditioning Settlements of Customer Disputes on a Customer's Agreement Not to Oppose Expungement

WASHINGTON – The Financial Industry Regulatory Authority (FINRA) announced today that its Board of Governors approved a rule proposal that would prohibit firms and associated persons from conditioning settlements of customer disputes on, or otherwise compensating customers for, an agreement not to oppose a request to expunge information from an associated person's Central Registration Depository (CRD) record. This proposal is designed to help ensure that the CRD system continues to contain information that is critical to investor protection.


Richard Ketchum, FINRA Chairman and Chief Executive Officer, said, "We continually make improvements to the arbitration and expungement process to further enhance investor protections. FINRA feels strongly that expungement of customer dispute information shouldn't be "bargained for" through settlement negotiations or otherwise."


FINRA operates the CRD system, which is an online registration and licensing system. The CRD system contains information regarding members and associated persons, including information such as personal, registration and employment history, as well as disclosure information such as criminal matters, regulatory and disciplinary actions, civil judicial actions and information relating to customer disputes. Much of the information in that system is available to investors through FINRA BrokerCheck. Brokers who wish to have customer dispute information removed from the CRD system and, thereby, from BrokerCheck, must obtain a court order directing expungement or confirming an arbitration award containing expungement relief.


The rule proposal will be submitted to the Securities and Exchange Commission for review, public comment, and approval.


FINRA, the Financial Industry Regulatory Authority, is the largest independent regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business – from registering and educating all industry participants to examining securities firms, writing rules, enforcing those rules and the federal securities laws, informing and educating the investing public, providing trade reporting and other industry utilities, and administering the largest dispute resolution forum for investors and firms. For more information, please visit www.finra.org.