Expungement relief was granted in a very high percentage of arbitration cases filed by investors against broker-dealers, particularly those that were resolved by settlement or stipulated awards.
FINRA panels granted expungement relief in 60.3 percent of arbitration cases, allowing broker-dealers to remove those customer claims from the records, from 2007 through May 2009. More recently, between May 18, 2009 through December 31, 2011, the arbitration panels granted expungement relief in 61.9 percent of the cases. Further, between January 1, 2007 through mid-May 2009, expungement was granted in 89 percent of cases resolved by stipulated awards or settlement. FINRA recently providing expanded guidance to assist arbitrators in the proper performance of their responsibilities regarding expungement. FINRA is reviewing its rules and interpretations, and will consider changes to provide clarity as to what actions in connection with conditions on settlements violate conduct rules.
In short, FINRA is under increasing pressure to reduce expungements.