Skip to main content

FINRA board approves rule prohibiting conditioning settlements of customer disputes on a customer's agreement not to oppose expungement

The Financial Industry Regulatory Authority (FINRA) announced today that its Board of Governors approved a rule proposal that would prohibit firms and associated persons from conditioning settlements of customer disputes on, or otherwise compensating customers for, an agreement not to oppose a request to expunge information from an associated person’s Central Registration Depository (CRD) record. This proposal is designed to help ensure that the CRD system continues to contain information that is critical to investor protection.

FINRA operates the CRD system, which is an online registration and licensing system. The CRD system contains information regarding members and associated persons, including information such as personal, registration and employment history, as well as disclosure information such as criminal matters, regulatory and disciplinary actions, civil judicial actions and information relating to customer disputes. Much of the information in that system is available to investors through FINRA BrokerCheck. Brokers who wish to have customer dispute information removed from the CRD system and, thereby, from BrokerCheck, must obtain a court order directing expungement or confirming an arbitration award containing expungement relief.

The rule proposal will be submitted to the Securities and Exchange Commission for review, public comment, and approval.