Over the past 20 years, FINRA has made it nearly impossible for brokers to expunge customer complaints and dispute information from their public records. Over the next three blogs, we will discuss the evolution of FINRA’s expungement process and how difficult expungement relief is for brokers to obtain in the future.
In 1981, the CRD system was created, and is now an online registration and licensing system for the securities industry. The CRD contains, among other things, information about every broker’s employment history, registrations, and licenses, as well as customer complaints or regulatory actions brought against the broker. The CRD system is the broker’s securities record.
Since a customer complaint is reported on a broker’s record regardless of the merit of the complaint, FINRA, grudgingly, allows brokers to seek expungement of disputed customer complaints from their records. However, what FINRA gives with one hand, it takes away with the other, making it nearly impossible to obtain expungement relief as discussed over the next blogs.
FINRA also established BrokerCheck to provide the public with information on members firms and their associated persons. BrokerCheck is an online tool for investors to research their brokers (or prospective brokers). FINRA requires firms to include a reference to BrokerCheck on each firm’s webpage and where registered persons are profiled. BrokerCheck is used to review the broker and firm records, allowing investor’s access to a broker’s complaint history.
Our next 2 blogs will discuss the expungement process and the future (or lack thereof) of it.