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Expungement may be requested in both customer and intra-industry cases. If the case was
filed by a customer or is an intra-industry case that requests expungement of customer
dispute information, the panel must follow Rule 2080 and comply with Rule 12805 or Rule
13805.
If the claim is between a FINRA member firm and a current or former associated person, and
the panel recommends the expungement of information not related to a customer dispute
from the Central Registration Depository (“CRD”), the expungement recommendation may be
based on the defamatory nature of the information in the CRD system. If the panel does not
base its expungement recommendation on the defamatory nature of the information, FINRA
will require the requesting party to obtain court confirmation of the award before executing
the expungement recommendation.
The arbitrator must make an affirmative finding that the subject matter of the claim or the
information in the CRD system meets one or more of the three standards, set forth in Rule
2080:
1. The claim, allegation, or information is factually impossible or clearly erroneous. This
standard, for example, would provide a basis for expungement for an individual who was
named in an arbitration claim but was not employed or associated with the member firm
during the relevant time.
2. The registered person was not involved in the alleged investment-related sales
practice violation, forgery, theft, misappropriation, or conversion of funds. This is an
objective standard based on CRD reporting requirements. This standard would require an
affirmative arbitral finding that the registered person was not involved in the alleged
investment-related sales practice violation, forgery, theft, misappropriation, or conversion of
funds. Under this standard, dismissal of a claim, by itself, would not be a sufficient basis for
ordering expungement.
3. The claim, allegation, or information is false. Under this standard, the adjudicator will
assess the evidence in the case, make an affirmative finding that the claim, allegation, or
information is false, and order expungement relief.
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Copyright © 2020 | My RIA Lawyer
Copyright © 2020 | My RIA Lawyer