In the world of securities arbitration and litigation, maintaining a clean professional record is essential for financial professionals, including registered investment advisors and broker-dealers. One critical issue many financial services professionals face is dealing with negative disclosures on their records, particularly those listed by the Financial Industry Regulatory Authority (FINRA). These disclosures can be the result of arbitration claims, regulatory investigations, or disputes with former employers or clients.

What is FINRA Expungement?

FINRA expungement is the process through which a financial professional seeks to have negative or inaccurate information removed from their Central Registration Depository (CRD) record. The CRD is a comprehensive database that tracks the registration and professional history of brokers and other financial professionals, and it is often used by potential employers, clients, and regulatory bodies to assess a professional's background.

If a financial professional has a complaint, arbitration award, or regulatory action listed on their CRD record, it can significantly impact their career and reputation. In some cases, expungement may be the solution, allowing the individual to clear their record of certain negative events.

How Does FINRA Expungement Work?

The process of expungement involves filing a petition with FINRA or the appropriate arbitration panel, demonstrating that the information in question is either factually inaccurate, immaterial to the professional’s qualifications, or otherwise should not be a part of their permanent record. The expungement process is rigorous and typically requires legal representation to navigate effectively.

To be eligible for expungement, the individual must prove that:

1. The information in the CRD record is clearly inaccurate or misleading.

2. The disclosure does not reflect the true nature of the event, and clearing the record would serve the public interest and help restore the individual’s reputation.

3. The information being expunged is not material to the financial professional’s qualifications to continue working in the industry.

The Role of Legal Professionals in Expungement

Given the complexity and potential impact on a financial professional’s career, the expungement process often requires the guidance of an experienced securities arbitration attorney. Law firms such as Bakhtiari & Harrison, which are well-versed in handling securities arbitration and litigation, often assist financial professionals with navigating the expungement process.

An experienced attorney can help the individual prepare a compelling case to present to FINRA or the arbitration panel. This involves gathering the necessary documentation, filing the appropriate petitions, and arguing the case effectively to ensure that the request for expungement is granted.

When Should Financial Professionals Consider Expungement?

There are several scenarios in which a financial professional may want to pursue FINRA expungement:

• Dismissed Claims: If a claim was dismissed and there was no finding of liability, it may be in the professional’s best interest to seek expungement.

• Settled Claims: If a settlement was reached but no wrongdoing was admitted, the financial professional may seek expungement if they believe the settlement is not representative of their conduct.

• Minor or Baseless Claims: If the complaint or arbitration is based on a minor issue or unfounded claims, expungement may help restore the individual’s record.

The Importance of Expungement for Financial Professionals

The ability to clear one’s record through FINRA expungement can have significant career benefits. A clean CRD record helps to enhance a professional’s credibility, making it easier to secure employment, attract clients, and establish a positive reputation in the financial services industry.

For financial services professionals, especially those working as registered investment advisors or broker-dealers, the presence of unresolved complaints, arbitration cases, or regulatory actions can be a serious obstacle to career advancement. Expungement can provide a critical opportunity to reset and move forward with a clearer professional history.

Conclusion

FINRA expungement is a valuable tool for financial professionals seeking to clear their records of inaccurate or misleading information. Whether dealing with arbitration claims, regulatory actions, or client disputes, the expungement process can help individuals in the financial services industry protect their reputations and continue their careers with confidence. With the assistance of experienced legal counsel, professionals can navigate the complexities of the expungement process and work toward a more favorable future.

If you are a financial professional facing negative marks on your record, consulting with a law firm like Bakhtiari & Harrison, which specializes in securities arbitration and litigation, may provide you with the expert guidance needed to pursue an expungement.