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FINRA Changes Could Make It Harder for Brokers to Hide the past

Under current FINRA rules, brokers are allowed to remove disciplinary actions filed against them for years from public records, however new rules may prevent that in the future. Proposed changes include a special provision that would allow brokers only one year to request the removal of disciplinary actions from online BrokerCheck records.

FINRA maintains BrokerCheck as a public protection tool, so investors can do background checks on brokers before they invest their money. The Public Investors Arbitration Bar Association and other investor advocates support BrokerCheck, but argue that FINRA's decision to allow brokers to eliminate evidence of past indiscretions undermines the purpose and value of the database.

FINRA Changes MayHelp to Protect Investors

The Securities and Exchange Commission (SEC) has a searchable database that lists all brokers who have been suspended or barred from practice for committing federal securities law violations. The SEC database was established to help investors and potential investors identify unethical brokers and financial advisors who may commit investment fraud and cause financial harm to unsuspecting clients. The website makes prior violations of brokers and advisors and all repeat offenders more visible, so investors can take steps to help protect themselves from fraud.

FINRA is currently taking steps to change the expungement process. They are discussing ways to establish a roster of arbitrators with additional training and specific background experience to approve expungement requests by brokers. They may establish a three-person panel of specially trained and experienced arbitrators to grant all expungement requests. A unanimous vote of three arbitrators would be required to clear any broker disciplinary actions from public record. FINRA believes that establishing a special panel to handle expungements may make it easier for investors and consumers to participate in expungement hearings and provide important information to arbitrators.

Registered securities firms and regulatory authorities submit information regarding brokerage and financial investment firms to the Central Registration Depository (CRD). This is the main registration and licensing system used by the United States securities industry. CRD collects disciplinary, administrative, and other information about registered personnel. They also collect customer complaints, arbitration claims, court filings and court judgments resulting from such claims. Some of the information collected by CRD is made public knowledge and available through FINRA's Broker Check.

If you have been a victim of broker investment fraud and need claims assistance, contact Meyer Wilson for a free consultation today. With two decades of experience and more than $350 million recovered for its clients, you can trust our investment and securities fraud attorneys to provide you with the representation you require in your time of need.

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

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