SEC Weighs in on FINRA’s Proposed Rule Amendments Pertaining to Expungement Procedures

In response to FINRA’s Regulatory Notice 17-42, the Securities and Exchange Commission published a letter detailing its thoughts regarding some rule amendments FINRA proposed relating to its expungement procedures.  According to FINRA, “expungement of customer dispute information is an extraordinary measure, but it may be appropriate in certain circumstances.”  Nevertheless, critics of expungement have voiced their concern that FINRA’s current procedures for expungement may not be adequate.  In response, FINRA proposed the amendments to improve procedures involving expungement requests. The proposed amendments include changes to FINRA Rule 12805, which outlines the conditions that arbitrators must satisfy prior to granting an expungement request.  Rule 12805 does not currently elaborate on how or when expungement relief may be requested during an underlying dispute with a customer.  The amendments would require a FINRA associated…

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