A growing number of brokers are filing expungement cases to erase old customer complaints.

Year-to-date through July 27, the number of stand-alone expungement cases decided by Finra arbitrators has more than doubled the number for the same period last year.

So far this year, 95 cases were concluded, the vast majority granting brokers’ requests to expunge old customer complaints and arbitrations. Last year, 42 such cases were decided, according to an analysis by Financial Advisor magazine.

These stand-alone expungement cases are filed separately and usually well after an incident has hit a rep’s disciplinary record. That’s in contrast to the common process now where brokers seek expungement at the same time a case is settled or goes to arbitration.

And it looks as if the pace of stand-alone expungement cases won’t stop anytime soon.

That’s thanks in part to Dochtor Kennedy, managing attorney at AdvisorLaw LLC in Broomfield, Colo., who actively markets to advisors looking to clean up their records. By his own count, he’s concluded more than 30 cases this year, and he says he has another 105 pending.

Other lawyers expect more brokers to continue bringing expungement cases, given the importance of a clean disciplinary record.

Standing Out On BrokerCheck

With Finra actively marketing BrokerCheck (the system through which investors can check an advisor’s disciplinary record) it’s critical for reps to clean up nuisance complaints, observers say.

“There are the TV ads for BrokerCheck, so everyone is becoming more savvy,” says Seth Lipner, a partner at Deutsch & Lipner of Garden City, N.Y., who represents investors and individual brokers.

“With any fee-based account, you have to send out a BrokerCheck report” with the account paperwork, Lipner adds.

Kennedy chalks up the expungement activity to a Finra requirement put in place a year ago requiring firms and advisors to provide a link to BrokerCheck with any online profile.

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