Finra’s proposal would make it “next to impossible for advisors like myself to be able to ... remove disclosures related to massive settlements like I experienced,” Higgenbotham said.

Several non-attorney arbitrators, meanwhile, objected to the idea of being disqualified from the special expungement hearings. “To unilaterally exclude knowledgeable, [experienced] arbitrators that have been providing this service serves no purpose to anybody [and] treats these arbitrators unfairly,” said Finra arbitrator Elena Rodriguez.

But plaintiffs’ attorney Steven Caruso, who chairs Finra’s national arbitration and mediation committee, supported the rule change, saying expungements are too easily granted.

By Caruso’s count, from 2013 through 2017 in cases that concluded with an award, expungement requests were granted 73 percent of the time. When cases were settled before a decision, expungements were given 88 percent of the time.

SIFMA countered that such anecdotal concerns “should not be the basis for wholesale changes to an essential remedy afforded to over 630,000 registered representatives.”


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