Understanding FINRA Expungement: A Vital Tool for Financial Professionals

For financial professionals, a blemish on their record can have significant repercussions on their career. One such blemish could be a disciplinary action or customer complaint that appears on the Financial Industry Regulatory Authority (FINRA) BrokerCheck report. These marks can deter potential clients, employers, and even cause regulatory scrutiny. Thankfully, FINRA offers a legal process known as expungement to help professionals clear their record in specific cases.

What is FINRA Expungement?

FINRA expungement is a process that allows registered individuals, such as financial advisors and brokers, to have certain customer disputes or disciplinary actions removed from their public record. The goal of expungement is to protect individuals from having minor or unjustified complaints permanently affect their professional reputation and ability to work in the financial services industry.

The Expungement Process

The expungement process is rigorous and requires a formal legal proceeding. It typically involves the following steps:

1. Filing a Request for Expungement: The first step is to file a request with FINRA for the expungement of a customer complaint, arbitration award, or regulatory action from the individual’s public record.

2. Arbitration Panel Review: Once the request is filed, a panel of arbitrators reviews the case. In most cases, the arbitrators will require the party requesting expungement to provide compelling evidence that the complaint was either unfounded or irrelevant to the individual’s professional conduct.

3. Court Approval: If FINRA’s arbitration panel approves the request, the decision must be validated by a court of law. The court will only approve expungement if it finds that the removal of the complaint is warranted, typically in cases where the complaint was proven to be false, had no merit, or the registered person was not involved in the alleged misconduct.

4. Final Outcome: Once both FINRA and the court approve the expungement request, the disputed entry is removed from the individual’s public record, clearing their name and allowing them to move forward with a cleaner professional history.

Why is Expungement Important?

Expungement is essential for financial professionals who are facing unsubstantiated complaints or disputes that may harm their professional reputation. A single complaint or arbitration award can impact a broker’s ability to attract new clients, secure employment opportunities, or continue operating in their field. In some instances, even if a financial professional has been cleared of wrongdoing, the mere appearance of a dispute on their record can be enough to raise concerns among clients or employers.

Who is Eligible for Expungement?

While expungement is a valuable tool for many, it is not available in every situation. In general, FINRA expungement is only granted under specific circumstances, including:

• Unfounded or No Merit Complaints: If the complaint was determined to be without merit or based on false information, expungement may be possible.

• Inability to Prove the Claim: In cases where the original claim could not be substantiated or was dismissed, financial professionals may request an expungement.

• Improper or Invalid Complaint: If the complaint was related to improper actions (such as misconduct that occurred outside the professional scope or after the advisor had left the firm), it may be expunged.

How a Law Firm Can Help with FINRA Expungement

Navigating the FINRA expungement process can be complex, requiring a thorough understanding of securities law and the arbitration process. An experienced law firm, such as Bakhtiari & Harrison, plays a crucial role in guiding clients through this process. With a deep understanding of securities arbitration and litigation, the attorneys at Bakhtiari & Harrison can help:

• Assess the Merits of the Case: The attorneys evaluate whether expungement is a viable option based on the circumstances of the complaint or dispute.

• File the Necessary Paperwork: Expungement requires filing a detailed request with FINRA and, in some cases, initiating a formal legal proceeding. Lawyers help ensure that all necessary documentation is properly submitted.

• Represent Clients in Arbitration: Lawyers represent financial professionals before FINRA and arbitration panels, presenting evidence and arguing for the expungement of the record.

• Ensure Court Approval: Once the arbitration panel approves expungement, an experienced lawyer can assist in securing court approval for the expungement order.

Conclusion

FINRA expungement is a powerful tool that enables financial professionals to remove unjustified complaints or disciplinary actions from their public record. For those facing the impact of a dispute, working with a skilled law firm such as Bakhtiari & Harrison is crucial. The firm’s expertise in securities arbitration and litigation ensures that financial professionals have the best chance of protecting their reputation and future career opportunities. If you're facing a complaint or regulatory issue on your record, contact a qualified attorney today to explore whether FINRA expungement is the right path for you.