FINRA’s New Expungement Rules Arrive, Lawyers Seek New Options

A new “work around” trend is being applied by lawyers in the industry in order to adapt to the rule changes made by FINRA. As lawyers working to defend financial advisors’ reputations, the usual task involves expungement of customer disputes on their Form U4. Formerly, FINRA regulations allowed for a fair and balanced way of seeking expungement of disclosures, allowing lawyers like HLBS Law to recover a client’s formerly glowing record when merited by the facts.

Now, with the new regulations, the process is now less balanced and is skewed towards making expungement a tougher hill to climb. With expungement in FINRA arbitration changing, new routes are being taken to bring justice to wrongful claims on the advisors’ records. Although some may argue that the rules are in place to be sure the expungement of an advisor’s record is deserved, FINRA has over corrected due to pressure from certain industry participants and now the focus is on the disclosure itself as opposed to the facts and circumstances of the disclosure.

In an article from Advisor Hub, titled “Brokers Seek to Circumvent Finra’s Tightened Expungement Rules,” a quote states, “In some cases, brokers’ lawyers are opting to bypass Finra’s forum, where the new rules took effect in October, and instead seek expungements directly in court or through outside arbitration forums such as JAMS and the American Arbitration Association” (Rozen). This perfectly demonstrates how when backed into a corner, lawyers must do their job and search for new options to help their client reach the necessary goal.

HLBS Law can help navigate other forums for expungement with our experience interacting with FINRA in various forums across the country. We can also analyze if your case still makes sense for FINRA arbitration, as certain cases are still eligible for expungement in FINRA arbitration. If you are tied up in a difficult case based on false customer complaints or want to seek expungement, contact us at HLBS Law to get help today.

Works Cited:

Rozen, Mariam. “Brokers Seek to Circumvent Finra’s Tightened Expungement Rules.” AdvisorHub.Com, 29 May 2024, www.advisorhub.com/brokers-seek-to-circumvent-finras-tightened-expungement-rules/.

Photo by: Dimitrij Paskevic