April 17, 2012 Comments (0) Blog, Securities Fraud

FINRA U-5 Expungement Procedure Updates

(Last Updated On: July 17, 2015)

FINRA is currently requesting comment on proposed new rules that would permit persons who are the “subject of” allegations of sales practice violations made in arbitration claims, but who are not named as parties to the arbitration (unnamed persons), to seek expungement relief by initiating  In re expungement proceedings at the conclusion of the underlying customer-initiated arbitration case.

Currently, the financial advisor of record on an account where the client has initiated a claim must report the claim to Central Registration Depository (CRD®) system on Forms U4 or U5, regardless of whether the advisor is named or alleged to have acted in any way inappropriately.  The current the Code of Arbitration Procedure for Customer Disputes (Customer Code) and the Code of Arbitration Procedure for Industry Disputes (Industry Code) (together, Codes) do not provide unnamed persons with express procedures to seek expungement of these types of allegations.

It appears that the new FINRA proposed In re expungement rules and accompanying forms would provide unnamed persons with a remedy to seek redress concerning allegations that could impact their livelihoods..

The following are the new proposed rules:

  • Rule 12100(z) (Unnamed Person);
  • Rule 12806 (Expungement of Customer Dispute Information by  Persons Named as Parties);
  • Rule 13100(cc) (Unnamed Person);
  • Rule 13806 (Expungement of Customer Dispute Information by  Persons Named as Parties); and
  • Rule 13807 (Expungement of Customer Dispute Information by   an Unnamed Person).

For more information on the proposed expungement rules, visit: http://www.finra.org/Industry/Regulation/Notices/2012/P125948

The foregoing information has been provided by The White Law Group.  The White Law Group is a national securities arbitration, securities employment, and securities regulation law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group visit http://www.whitesecuritieslaw.com.

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