In the world of financial services, reputation is everything. Whether you’re a registered investment advisor, broker-dealer, or other financial professional, your professional history is key to your success. Unfortunately, disputes and complaints—whether they are minor or unfounded—can have a lasting impact on your career. This is where FINRA expungement comes into play.

FINRA, the Financial Industry Regulatory Authority, maintains a vast database known as the Central Registration Depository (CRD) that tracks the professional history of individuals working in the securities industry. This database includes records of any customer disputes, complaints, or regulatory actions taken against a financial professional. If a claim or complaint is filed against an individual, even if it is dismissed or resolved in their favor, that information can remain on their permanent record, affecting their reputation, career prospects, and the trust clients place in them.

Fortunately, FINRA expungement offers a path to remove such records from a professional’s history—providing a critical means for individuals to clear their names and protect their careers.

What is FINRA Expungement?

FINRA expungement refers to the legal process of requesting the removal of a customer complaint or dispute from an individual’s public record in the CRD. The process allows registered representatives to seek the expungement of a particular arbitration award or settlement that may have been wrongly filed, or where the allegations were ultimately unfounded. This helps ensure that financial professionals are not unfairly penalized for complaints that do not accurately reflect their practices.

When is Expungement Appropriate?

Expungement is not granted automatically. In fact, FINRA has strict guidelines that must be followed in order for an individual to successfully remove a complaint from their record. Generally, expungement is only granted when:

1. The Claim Was False or Meritless: If the allegations were proven to be false or the financial professional was found not to be at fault, expungement may be an option.

2. The Individual Was Not Involved in the Alleged Misconduct: In cases where the professional had no direct involvement in the dispute or where the complaint was the result of a misunderstanding or miscommunication, expungement may be pursued.

3. The Dispute is Not Material to the Person’s Qualifications: If the alleged incident has no material impact on the professional’s qualifications or ability to perform their duties, expungement could be considered.

4. The Client Has Withdrawn the Claim: In cases where a client withdraws their complaint or a settlement agreement is reached that does not implicate the professional in misconduct, expungement may be a viable option.

How Does the Expungement Process Work?

The process of seeking FINRA expungement is typically initiated after a customer dispute or complaint is filed. If the dispute is resolved in the financial professional's favor, they may choose to seek expungement. To begin the process, the financial professional must file a request with FINRA, which includes presenting their case for why the record should be expunged.

The process generally involves the following steps:

1. Petition for Expungement: The individual must file a petition with FINRA, providing evidence that the dispute is either false or that the financial professional should not have been involved in the matter.

2. Hearing Before an Arbitrator: In most cases, a FINRA arbitrator will hold a hearing to determine whether expungement is appropriate. During this hearing, the individual can present evidence and argue their case.

3. Court Approval: Once the arbitrator renders a decision, the financial professional must obtain a court order confirming the expungement. In some cases, a judge may review the findings and approve the expungement request.

4. Updating the CRD: If the expungement request is granted, FINRA will update the individual’s CRD record to remove the disputed complaint or arbitration result.

The Role of Legal Representation

Given the complexities of FINRA expungement, it is crucial for financial professionals to seek experienced legal representation. Law firms like Bakhtiari & Harrison, which specialize in securities arbitration and litigation, can provide the expertise necessary to navigate the expungement process successfully. These firms work closely with clients to develop a strategic approach, ensuring that all necessary evidence is presented in a compelling manner and increasing the likelihood of a successful expungement request.

Moreover, legal professionals can assist in gathering testimony from witnesses, preparing legal briefs, and ensuring compliance with FINRA’s procedural requirements, making the process more efficient and less stressful for their clients.

Conclusion

For financial professionals, a single complaint on their record can significantly impact their reputation and career. However, FINRA expungement offers an important mechanism for clearing unjust or unfounded claims from their public record. While the expungement process can be complex, working with a skilled law firm like Bakhtiari & Harrison can increase the chances of success and help financial professionals protect their professional standing.

If you are facing a complaint or dispute that threatens your career, it is essential to understand your rights and consider the expungement process to ensure that your record accurately reflects your professional capabilities and achievements.