The Financial Industry Regulatory Authority (“FINRA”) proposed to increase the fees firms, and stockbrokers pay when seeking to expunge customer complaints from brokers’ regulatory records on BrokerCheck.

FINRA has proposed to the Securities and Exchange Commission to amend its arbitration codes mandating stockbrokers or their firms to pay a minimum of $9,475 in filing and processing fees when making standalone expungement requests.

Currently, a stockbroker could seek expungement where FINRA assesses only $300 if the stockbroker requests a nominal monetary amount against their firms. A single arbitrator decides these cases, but under the proposed rule, all expungement hearings would require three arbitrators.

Expungement requests have increased throughout the years as stockbrokers move to sanitize their records ahead of changes FINRA proposed two years ago. These changes would make it more challenging to remove customer complaints that show up on their publicly available BrokerCheck records.

More than three-quarters (76%) of 3,114 standalone expungement requests made between January 2017 and June 2019 have included small monetary claims aimed at lowering costs, according to the amended rule filing. Finra believes it gave up $7.3 million because of lower fees.

If a stockbroker is interested in expungement, he or she must consider doing so now and not in the future, because it appears that in time, expungements will only become more expensive and difficult to accomplish. 

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