Have a Spotty Record? Better Clean It Now

12 Marketing Rules for Insurance Brokers and Everyone Else!
November 28, 2018
FINRA 2018 Exam Report
December 12, 2018

Clean your spotty records now before rules tighten!

If you’ve got a blemish on your disclosure records you’d like removed, do it now! Next year those spots will be harder to bleach out.

According to reporter Rita Raagas De Ramos writing in Financial Advisory IQ, time is running out for brokers who may want to have their disclosure records expunged under the Financial Industry Regulatory Agency’s (FINRA’s) current rules.

Raagas De Ramos reports that the current rules, which many brokers already find cumbersome, are expected to undergo a serious change which likely will make the process costlier and more complex for advisors and require a bit more “hoop jumping” even for minor disclosures unrelated to performance or aptitude.

Likely changes involve:

  • Changing the timeframe available to those seeking to expunge their records. Under the proposed rules, registered individuals named in an arbitration case would, for example, have to file an expungement request no later than 60 days before the first scheduled hearing session. Failure to file by the FINRA deadline would permit other parties to object to the request. Other cases, like those closed with an award, could have up to one year to file a new expungement request.
  • Establishing a roster of arbitrators from which case reviewing panels would be selected. FINRA wants the Neutral List Selection System it uses to assign arbitrators to cases to randomly select three public chairpersons from a special expungement arbitrator roster to decide an expungement request. To qualify for the roster, applicants must complete an enhanced expungement training; be admitted to practice law in at least one jurisdiction; and have five years of experience in litigation, federal or state securities regulation, administrative law, service as a securities regulator, or service as a judge.
  • Requiring the three-person panel decisions to be unanimous.

Why is FINRA tightening the rules?

Too many expungements get through. According to a 2015 study by the Public Investors Arbitration Bar Association, 87.8% of all cases involving stipulated awards or settled customer claims were granted expungement between 2012 and 2014. Some say that the high rate of expungement was more likely due to lawyers selecting only those cases that have a high rate of success than flexible reviewers.

Also at issue is FINRA’s intent to make disclosure records publicly available, whether they are true or not – a move that many brokers say is reversing the premise that one is innocent until proven guilty. If a complaint exists and is made public, they say…it sticks.

Could better recordkeeping improve expungement turnaround?

Maybe. And that’s where Patrina comes in. We’ve built our business based on helping organizations stay on the “straight and narrow” efficiently and cost-effectively. So, let’s talk. Call 212-233-1155 to ask about Patrina’s cost-effective and comprehensive, 8-module compliance solution, and compliant data capture, file storage, records archiving, and designated third-party services specifically designed for the financial services community. Be smart. Be covered.

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