Finra’s proposal is “a step in the right direction to begin addressing our concerns about the frequency with which customer complaints are removed from regulatory records,” said Joseph Brady, executive director of the North American Securities Administrators Association, in a statement.
While the integrity of the BrokerCheck disciplinary database needs to be maintained, Finra policy “must also be balanced with financial advisors' need to expunge information from their record that has no meaningful regulatory or investor protection value,” said David Bellaire, general counsel of the Financial Services Institute, in a statement.
Katrina Cavalli, a spokesperson for the Securities Industry and Financial Markets Association, said the trade group was still reviewing the proposal and had no immediate comment.
The debate will be “a function of the recognition that [expungements] shouldn’t be completely open-ended,” said plaintiffs’ lawyer Philip Aidikoff, of Aidikoff Uhl & Bakhtiari in Beverley Hills, Calif., who also represents brokers.
“Whether it’s a year or longer is something that’s going to get hashed out,” he said.