The Financial Industry Regulatory Authority has taken another step toward making it more difficult for brokers to have customer complaints expunged from their public records.
The Finra Board of Governors announced Friday the approval of enhanced training and guidance for arbitration panelists who rule on expungement requests, 93% of which are currently granted.
The board also approved banning compensated non-attorney representatives, or NARs, from representing clients in Finra arbitration cases, a decision that was applauded by plaintiffs’ attorneys.
“This is important, because it’s Finra’s first public disclosure that they want to ban these guys,” said Andrew Stoltmann, immediate past president of the Public Investors Arbitration Bar Association.
“These outfits out there aren’t attorneys but have been able to represent investors in Finra arbitration claims,” Mr. Stoltmann said. “We issued a report on this, saying they should be banned.”
The rules, which were initially proposed in September 2017 and were followed by a public comment period, will now be presented to the Securities and Exchange Commission, which will open another public comment period.
“We closed some loopholes in the expungement process and codified our existing web guidance on expungement into rule form,” said Rick Berry, Finra’s executive vice president and director of dispute resolution.
The rule that deals with the expungement of brokers’ online public records promotes enhanced guidance and training for arbitration panelists and introduces additional efforts to get customers to testify at arbitration hearings, including the use of remote video-conferencing.
The rule underscored Finra’s push to reduce the high volume of expungements by stating, “Expungement is an extraordinary remedy