LEGAL GUIDE
Written by attorney Thomas Charles Frost | Aug 26, 2016

Update Regarding Broker Expungement of CRD Records

FINRA Rule 2080 applies to claims for expungement of customer complaints and customer initiated arbitrations, and provides that brokers seeking to expunge such information from the CRD system to obtain a court order directing expungement or confirming an arbitration award recommending expungement.

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Before ordering expungement under Rule 2080, the arbitrators must state one of these three grounds for expungement in their order. If the arbitrator’s award does not state one of these three grounds for expungement, the broker must name FINRA as a party in the subsequent court proceeding to confirm the arbitration award. FINRA will not expunge any CRD information related to a customer dispute based solely on an arbitration award. Rather, any FINRA arbitration award ordering expungement must first be confirmed as an enforceable court order. If the arbitrator’s award does state one of these three grounds for expungement, FINRA must be notified of the court proceedings to confirm the award, but FINRA may waive its right to be named as a party in the confirmation proceedings.

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