Thursday, November 30, 2023
As these may also be of interest to our readers here, I wanted to link to a couple of recent op-eds.
As to the first, I drafted one with Joe Peiffer about FINRA's expungement process. It ran in Financial Planning Magazine on November 15. The crux of the argument is that FINRA's reforms to its expungement process won't fully solve the problem and will instead burden state regulators with additional unfunded responsibilities. Here is a small excerpt:
Ultimately, the current reforms offer incremental improvements that will likely slow the deletion of valuable public records. Sadly, however, the current system continues to outsource expungement decisions away from FINRA — the primary regulator for brokerage firms — and onto independent contractor arbitrators. This system leaves the responsibility for educating those arbitrators about reasons not to grant expungements to complaining customers and thinly resourced state regulators.
This approach benefits FINRA because it allows it to avoid entangling itself on these issues. It also shifts costs away from FINRA. After all, parties seeking expungements pay hefty fees to FINRA for arbitration costs. Yet the public pays the price when FINRA outsources responsibility for wise expungement decisions to poorly informed arbitrators who usually only hear from the brokers seeking expungement.
Ultimately, FINRA should take this issue out of arbitration entirely and have its Office of Hearing Officers make decisions about which matters merit expungement. Unlike the broken arbitration process, this system would allow for error correction because decisions can be appealed to FINRA's National Adjudicatory Council, its board of governors, the SEC and the federal courts.
To be clear, the reforms are a good thing and will make some real improvements. But they won't go far enough and will likely fail to solve the underlying problems. The op-ed calls for adopting a solution James Fallows Tierney and I advocated for in a forthcoming law review article--moving expungement out of arbitration entirely.
As to the second, I put out a quick piece in The Hill on Twitter/X's decision to file a claim against Media Matters. It argues that Musk won't be able to establish causation because his own actions have done much more to drive advertisers away. The op-ed closed this way:
Ultimately, the lawsuit appears to be another misstep by Musk. This thin-skinned retaliation undercuts any claim that X offers a home for free speech. The litigation will also struggle with showing that the Media Matters reporting actually caused advertisers to depart. After all, Musk’s recent round of antisemitic amplification was widely reported and condemned by the White House. The litigation seems much more likely to focus additional attention on Musk’s own statements — and the toxic accounts pushing hate speech and conspiracy theories on the site.