Labor & Employment Law

U-4 and U-5 Expungements - FINRA's View

By Dobin & Jenks

I have recently received several inquiries regarding expungements of U-4 and U-5 information. I have said this more than once, but "in the old days" an expungement was a piece of cake. The parties agreed to it, whether it was a customer or industry dispute, and it was done.

Of course FINRA got wise to this and started slowly tightening the noose around expungements. I have done research on this issue before but wanted to share this one link I found which you, my 3 loyal readers, may find helpful. This page contains the be-all and end-all from FINRA regarding expungements.

There are two classes of expungements - customer and non-customer. Expungements of customer complaints require specific findings. If a U-4 or U-5 disclosure is not customer-related, then a different set of rules applies and the only finding that an arbitration panel needs to make is that the disclosure was defamatory.

There is also a procedural difference once the successful litigant has obtained an expungement Order. If it is customer-related, a court needs to sign off on the change to the U-4/U-5 and FINRA needs to be made a party to the action. If the expunged information is not customer-related, a simple finding of defamation is sufficient for FINRA to remove the information from the CRD system.

Now you're informed. That's the view from The Law Planet - Jupiter, Florida.

Full post as published by The Law Planet Blog on July 21, 2008 (boomark / email).