FINRA Expungements – Arbitration Costs Will Drastically Increase

Currently, a registered representative could bring an expungement claim to remove customer disputes for a $50.00 FINRA filing fee. This rule is set to change and increase the filing fee to $1,575.00.

The Securities and Exchange Commission has accepted a proposed FINRA rule establishing a minimum fee of thousand dollars for broker requests to clear customer complaints found on their BrokerCheck.

A registered representative requesting expungement would have to pay $1,575. The firm would be charged a $3,750 process fee and a $1,900 surcharge. A $1,125 prehearing fee would be split between the parties.

Many registered representatives bringing an expungement request plead $1.00 in the statement of claim. Currently, a $1.00 demand in damages dictates a $50.00 filing fee. After the case is filed, the registered representative would then withdraw the $1.00 request. A claim seeking nominal damages would be decided by one arbitrator and not three.

The new rule will require registered representatives to pay not only a higher filing fee but a more expensive arbitration hearing fee.

The impact of this new rule will likely deter many registered representatives from filing expungement requests. Registered representatives will have to weigh the additional cost and attorney’s fees associated with arbitration to maintaining a customer complaint on his or her BrokerCheck.

FINRA has not released a date that the new rule will go into effect. Stockbrokers considering filing an arbitration claim now before the increase takes place should contact Beverly Hills attorney David Harrison at (310) 499-4732 for a free consultation.

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