Fewer brokers have been successful in efforts to expunge complaints from their records after the Financial Industry Regulatory Authority adopted reforms in the process, reports AdvisorHub.
Data provided by FINRA, reviewing awards from January 2024 through May 2025, showed that brokers who filed straight-in expungement requests seeking to clear complaints that had already been resolved were successful in about 66% of cases. Panelists granted the expungements in 87 cases and denied 45 of the requests. The figure was significantly below the success rate in straight-in expungement cases that occurred before the reforms, which plaintiff lawyers and investor advocates said was as high as 90%.
The new rules, which were approved by the SEC and took effect in October 2023, were aimed at making it more difficult for brokers to expunge client disputes from their records. They were developed in response to concerns that it had become too easy for brokers to clear customer complaints from their disciplinary history contained in the Central Registration Depository
FINRA’s plan created a special roster of arbitrators to hear so-called ‘straight-in’ expungement requests. These are separate arbitration claims filed by a registered representative against a member firm or the customer. The claims are now decided by a three-person panel randomly selected from a roster of experienced public arbitrators with enhanced expungement training rather than the current option of having a sole arbitrator. The rules also prohibit parties from agreeing to a smaller panel or from striking arbitrators, and set time limits on when brokers can file expungement requests. Straight-in requests must be filed within two years of the closing of a customer arbitration or civil litigation, or within three years after the date the customer complaint was initially reported in the Central Registration Depository system if the complaint does not become a customer-initiated arbitration or civil litigation.
Among those who had been concerned about the high rate of expungements was the Public Investors Advocate Bar Association. (PIABA) “The significant drop in expungement recommendation rates in straight-in cases is a welcome sign that our advocacy has had its intended effect,” said PIABA President Adam Gana, adding that arbitrators are “taking their jobs seriously.”
Though the rules also allow state regulators to participate in the process, the analysis showed that state regulators only took part in 13 of 53 expungement request cases.
While the number of expungement requests dropped sharply in the first year after the reforms were enacted, the data indicated that straight-in requests rose to about 20 per month during the first five months of 2025, as compared to about 12 per month in 2024.
Gana also expressed concern about brokers turning to other arbitration venues in hopes of achieving better results. “Both FINRA and state regulators must be vigilant to ensure that the reforms are not undermined through procedural manipulation by the industry,” he said.
The attorneys at Lewitas Hyman have considerable experience with FINRA’s procedures for expunging false, defamatory and erroneous disclosures from a registered representative’s record. This experience includes seeking expungement in existing FINRA customer and employment arbitrations, as well as filing separate FINRA arbitrations for the sole purpose of seeking expungement. If you have any concerns about problematic disclosures on your CRD record or those that are viewable on FINRA’s BrokerCheck portal, contact Lewitas Hyman at (888) 655-6002 or through our online contact form for a free consultation.
