WE ASSIST BROKERS WITH SEEKING EXPUNGEMENT OF NEGATIVE DISCLOSURES ON THEIR FORM U-4’S AND U-5’s
Broker and investment advisor records are now public through the FINRA Broker Check database at www.FINRA.org and accessible by all investors. Brokers or Advisors with a negative entry on their registration, be it an adverse arbitration award, a lien filing or a termination from a member firm for example, are less likely to be hired to manage an investor’s assets and damages his/her reputations. In many instances, we can assist clients in efforts to have the negative disclosure(s) removed (expunged) from his/her CRD, thus creating a clean record for anyone utilizing the FINRA Broker Check. Gonser Law PC has assisted many brokers by filing a FINRA Action seeking expungement and successfully obtaining an Award that is then confirmed in a Court of competent jurisdiction directing FINRA to remove the negative disclosure from the broker’s record forever.
- What types of information can be expunged?
The information that is typically expunged arises out of disputes between customers and member firms or their associated persons that have been reported on Forms U-4 and U-5 by the brokerage firm in response to those claims.
- What steps should one take to seek expungement?
If a party seeking expungement is involved in an active arbitration proceeding, he or she should request expungement in his or her answer, counterclaim, or statement of claim. If a proceeding has concluded, our firm is able to file a new FINRA action solely aimed at obtaining expungement of the negative disclosure. The 3 standards for a panel granting expungement of CRD entries is specified in Rule 2080 of the FINRA Code of Arbitration Procedure. This rule dictates the procedural requirements for seeking expungement and the arbitrators will ultimately determine whether expungement should be awarded following a hearing. The standard of proof in such a hearing is whether the Panel determines any of the following apply to the original claim:
- The claim, allegation, or information is factually impossible or clearly erroneous.
- The registered person was not involved in the allegedly investment-related sales practice violation, forgery, theft, misappropriation, or conversion of funds.
- The claim, allegation, or information is false.
If any of these three (3) standards are met, that Award can be confirmed in Court with an order that FINRA remove the negative entries.