Thursday, June 3, 2021

Expungement Proposal Withdrawn

In a rare turn of events, FINRA has withdrawn its rule proposal for making reforms to the expungement process.  FINRA issued a statement after the withdrawal indicating that it would work with NASAA and other stakeholders to pursue "more fundamental changes to the expungement process."

The surprising development is a bit of a mixed bag.  While it's good that FINRA will be working to deliver a proposal addressing core problems with the existing expungement framework, the decision to withdraw the proposal leaves the status quo for the interim period.  Without a moratorium on expungements the process will continue to delete significant information about broker misconduct without any real adversarial scrutiny.  Hopefully, FINRA will move swiftly to propose some meaningful reform soon.

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