Client Alerts

Update on the FINRA Expungement Process

By: Christopher D. Seps

About: Financial Services

Earlier this month, the SEC approved the first of several rule changes that FINRA has proposed for the process governing the expungement of customer complaints from a broker’s record. The approved rule change will make it significantly more expensive for brokers (and their broker-dealers) who are seeking expungement.

Brokers will no longer be able to include $1 in damages along with their request for expungement in order for their claim to fall on the low end of FINRA’s graduated filing fee (and hearing fee) schedule. Instead of paying a $50 filing fee, brokers will now be charged $1,575 (and broker-dealers will be hit with a $3,750 processing fee and $1,900 surcharge, all for being named as a nominal respondent in the proceeding). To read more about the rule change, click here for my recent blog post.

FINRA has not yet released a regulatory notice regarding this change, but the rule is expected to go into effect later this summer. And, more proposed rule changes (outlined below) are expected to go to the SEC for approval later this year. So, any brokers who are interested in seeking expungement should consider doing so sooner rather than later.

Many changes will take place in the next year and a half, particularly as the future rules regarding expungement of customer dispute information are finalized. Keep an eye out for periodic updates from us. It will be interesting to see how all of the rule changes finally play out.

Ulmer’s Broker-Dealer & Investment Litigation Group is available to provide you with strategic advice and counseling. Please reach out to our attorneys if you have any questions.

The information provided in this communication speaks only to the information and guidance we have available as of the date of publication and is subject to change. We will continue to follow further issued guidance and regulations and endeavor to post those updates via our website. Please continue to follow these updates at ulmer.com. This legal update was created by Ulmer & Berne LLP, and is not intended as a substitute for professional legal advice. Receipt of this communication, by itself, does not create an attorney client relationship. For any questions, or for further information, please contact Chris Seps at cseps@ulmer.com.