Looking For A FINRA BrokerCheck CRD Expungement Attorney?

Are you a registered representative with unfair customer complaints or other disclosure items on your FINRA BrokerCheck Report or CRD record (submitted via Form U4, Form U5, or Form U6) that are being reported on your FINRA BrokerCheck Report and hindering your ability to grow your practice or find another job in the financial services industry? If so, a Galvin Legal BrokerCheck Expungement Attorney may be able to help you have the unfair disclosures removed through a FINRA CRD Expungement proceeding.

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What are the Central Registration Depository (CRD) and FINRA BrokerCheck Systems?
How does FINRA CRD Expungement work?
What Disclosures Can be Expunged?
Can Customer Disputes and Complaints be Expunged?
Can the Form U5 Reason for Termination and Associated Disclosure Reporting Pages (i.e. Employment Separation After Allegations) be Expunged?
Why You Should Retain a Form U5 Negotiation Attorney Immediately Upon Being Fired or Terminated?
What Disclosures Cannot be Expunged?
The Eligibility Rule’s Time Limit to File for Expungement
Request a Free Consultation with a FINRA CRD Expungement Attorney
Cases
Updates

What are the Central Registration Depository (CRD) and FINRA Broker Check Systems?

FINRA operates and maintains the Central Registration Depository (“CRD”) pursuant to its rules and its agreements with other securities regulators and the North American Securities Administrators Association (NASAA). The CRD contains disclosure and administrative information about registered securities firms (e.g. broker-dealer, brokerage firms, registered investment advisors) and registered individuals (e.g. brokers, registered representatives, investment advisor representatives). The data within the CRD can be used like a background check on brokers and financial advisers, showing any complaints that may have been filed against them, enforcement actions, education, as well as licensing and professional certifications.

The CRD is populated with information from the registration forms submitted by broker-dealers and regulators. There are currently six different Uniform Registration Forms that are used to file information in the CRD. The most common forms are Forms U4, U5, and U6. Form U4 (Uniform Application for Securities Industry Registration or Transfer) and Form U5 (Uniform Termination Notice for Securities Industry Registration) are used by broker-dealers to register and terminate the registrations of associated persons with self-regulatory organizations (“SRO”) and jurisdictions. Form U6 (Uniform Disciplinary Action Reporting Form) is used by SROs, regulators, and jurisdictions to report disciplinary actions against broker-dealers and associated persons. This form is also used by FINRA to report final arbitration awards against broker-dealers and associated persons.

The public is unable to access the CRD directly. FINRA BrokerCheck is an online tool that provides the public with limited access to CRD information. Some of the CRD information available to the public through the FINRA BrokerCheck system include:

A summary report of brokers and their credentials;
Broker qualifications, such as current registrations and licenses, including any exams that they have passed;
Registration and employment history that includes a list of securities firms the broker has been registered with and employment history going back ten years (both within and outside the securities industry);
and disclosures regarding customer complaints and disputes, regulatory actions, investigations, employment separations after allegations have been made, criminal and civil judicial matters, judgements and liens, and financial matters.

Brokers may seek to expunge information from their record in the CRD. The process is called CRD Expungement and is accomplished through an arbitration proceeding through FINRA Dispute Resolution.

How does FINRA CRD Expungement work?

In brief, a party seeking a U4 Expungement should request the expungement, in his or her answer or counterclaim in an existing arbitration proceeding, or by filing a statement of claim. The arbitrators will decide whether to grant a request for expungement on the basis of one or more of the three standards specified in FINRA Rule 2080. In addition, FINRA’s Code of Arbitration Procedure for Customer Disputes and Code of Arbitration Procedure for Industry Disputes (collectively, the “Arbitration Code”) contain special procedural requirements relating to requests to expunge customer dispute information, including that arbitrators hold a recorded, in-person or telephonic hearing, review settlement documents, consider the amount of payments made to any party, and any other terms and conditions of settlement. If the arbitrators grant expungement relief, the Arbitration Code also requires that they briefly explain in the award the factual basis(es) for finding that U5 Expungement is appropriate under one or more of the FINRA Rule 2080 standards. For more information regarding these requirements, see FINRA Rule 12805, FINRA Rule 13805, and Regulatory Notice 08-79. The arbitrator(s) must, after complying with FINRA Rule 12805 or FINRA Rule 13805, make an affirmative finding that the subject matter of the claim or the information in the CRD system meets one or more of the three standards, set forth in FINRA Rule 2080, for U5 Expungement. Without such an affirmative finding, FINRA would have no basis under FINRA Rule 2080 to waive the requirement that it be named as a party in the court process to confirm the U5 Expungement award.

If the arbitrator(s) grant the FINRA U5 Expungement, the award must then be confirmed in court before the information can be removed from the CRD. FINRA rules require that FINRA be named as a party in the court proceeding to confirm the arbitration award unless it grants a waiver. The party seeking expungement should send FINRA a written request for a waiver, along with relevant documents, such as the statement of claim, answer, any settlement agreement, the arbitration award, and any other relevant documents. Upon receipt of a request for a waiver, FINRA staff will provide the States where the individual is registered, or is seeking to be registered, with a copy of the waiver request and any accompanying documents. FINRA staff will review the information to determine whether the award complies with FINRA Rule 12805 and FINRA Rule 13805, and whether the CRD Expungement relief was awarded based on one or more of the standards in FINRA Rule 2080. Provided that the award reflects compliance with the rules, and contains an affirmative finding that the expungement meets one or more of the standards in FINRA Rule 2080, FINRA staff will generally grant the waiver. See Notice to Members 04-16. FINRA will provide a written response granting or denying the waiver request. If a party whose waiver request is denied still wishes to proceed, he or she must name FINRA as a party, and serve FINRA with notice, in any litigation to confirm the award. State authorities will make their own determination on whether to oppose the expungement.

FINRA and State participation in the court confirmation proceeding is an additional safeguard to ensure that courts are aware of the standards of FINRA Rule 2080 and relevant regulatory and investor protection interests. There is currently no procedure in place to ensure that courts are made aware of the investor protection, public policy, and regulatory considerations implicated by expungement of customer dispute information. Although courts are not obligated to adhere to the standards enunciated in FINRA Rule 2080, the Rule gives FINRA and the States the opportunity to participate in the court confirmation process and make courts fully aware of investor protection and regulatory concerns relating to inappropriate expungements. FINRA will generally participate in the court confirmation proceeding and oppose confirmation of the expungement directive if an expungement award was not issued in compliance with FINRA Rule 12805 or FINRA Rule 13805, or if arbitrators do not make an affirmative finding as required under FINRA Rule 2080. As a further means to ensure that the court is made aware of the investor protection and regulatory implications of an expungement, States may choose to intervene if they have concerns regarding whether investor protection or regulatory issues will be fairly considered.

FINRA may continue to expunge, without a court order, expungement directives contained in arbitration awards rendered in disputes between registered representatives and firms in which the arbitration panel states that expungement relief is being granted because of the defamatory nature of the information. Accordingly, FINRA will expunge this information from the sections of the Form U5 relating to reasons for terminations or internal reviews without requiring court confirmation of the order. If, however, the arbitration panel orders expungement of customer dispute information from any other section of the Form U5 or from the Form U4, the order is subject to the requirements of FINRA Rule 12805, FINRA Rule 13805, and FINRA Rule 2080 with respect to the additional expungement relief.

What Disclosures Can be Expunged?

FINRA Expungement is considered to be an “extraordinary remedy” and arbitrators are told that they should only recommend it under certain circumstances. Generally speaking, customer complaints and disputes, and Form U5’s Reason for Termination and the associated Disclosure Reporting Pages (i.e. Employment Separation After Allegations) can be expunged if they meet the grounds outlined in FINRA’s rules.

Can Customer Disputes and Complaints be Expunged?

FINRA Rule 2080 establishes the grounds necessary for expungement of customer dispute information from the CRD. The Rule provides three narrow grounds for FINRA CRD Expungement of Customer Disputes and Complaints:

The claim, allegation, or information is factually impossible or clearly erroneous;
The registered representative was not involved in the alleged investment-related sales practice violation, forgery, theft, misappropriation, or conversion of funds; or
The claim, allegation, or information is false.

FINRA Rule 2081 prohibits any dispute settlements from being conditioned on, or otherwise compensating a customer for, the customer’s agreement to consent to, or not oppose, the BrokerCheck Expungement request.

Can the Form U5 Reason for Termination and Associated Disclosure Reporting Pages (i.e. Employment Separation After Allegations) be Expunged?

Form U5 is a form which, within 30 days, brokerage firms must complete and file with securities regulators to report the termination of a broker’s employment. On Form U5, the brokerage firm must report the reason for the broker’s termination, and whether the broker voluntarily left, was permitted to resign, or was fired. The brokerage firm also must disclose:

Whether any governmental agency or SRO is or was investigating, or has brought any disciplinary action involving, the broker;
Whether the brokerage firm is or was internally investigating the broker for, or whether the firm fired the broker after someone accused the broker of, violating securities laws or rules;
Whether, while working for the firm, the broker was charged with or convicted of certain crimes; and
Whether, while the broker was working for the firm, anyone brought customer complaints, arbitration claims, or civil lawsuits against the broker.

If the brokerage firm’s answer to any of these Disclosure Questions is “yes,” then, on the appropriate Disclosure Reporting Page (“DRP”) included in the broker’s Form U5, the firm must give complete details of the events or proceedings. The information set forth on a broker’s Form U5 is recorded in each broker’s CRD file, and is made available to other broker-dealers for them to use in deciding whether to hire the broker. If a brokerage firm is seeking to retaliate against a broker, the firm may include defamatory information on the Form U5 that damages the broker’s good name and severely harms the broker’s ability to find new employment. Further, there is a growing trend in which brokerage firms use Form U5s as an anti-competitive tool. That is, financial services firms increasingly disparage brokers on Uniform Termination Notices in order to dissuade customers from following the brokers to new firms.

Why You Should Retain a Form U5 Negotiation Attorney Immediately Upon Being Fired or Terminated?

Initially, it is critical that, immediately upon being fired or terminated by his or her firm, brokers retain a Form U5 Negotiation Attorney to negotiate the information that the former employer is going to include on the broker’s Form U5. The negotiable information includes:

The reason for the termination;
Whether the broker left voluntarily, was permitted to resign, or was fired; and
The Investigation, Internal Review, Criminal, Regulatory Action, Customer Complaint/Arbitration/Civil Litigation, and Termination Disclosures.

A discharged broker, through his or her lawyer, may ask the financial services firm to specify on the broker’s Uniform Termination Notice, and may supply facts warranting specification by the firm that, the actions by the broker that resulted in his discharge or his negotiated departure were not securities-related, investment-related, customer-related, or sales practice-related. There is leeway for such negotiation of the language of a broker’s Form U5. This is the case because FINRA requires only that a brokerage firm, in responding to Form U5 questions, “provide sufficient detail . . . such that a reasonable person may understand the circumstances that triggered the affirmative response.” See FINRA Regulatory Notice 10-39.

Fortunately, when negotiations do not succeed, there is a process by which a broker may be able to expunge negative statements made by his or her former brokerage firm on the broker’s Form U5. Specifically, a broker may bring, against his former employer, a FINRA arbitration seeking expungement from the CRD, the broker’s Form U5 filed by the ex-employer upon the broker’s termination, and any Form U5 or Uniform Application for Securities Industry Registration filed or amended after the broker’s termination, specified employment-related information concerning the broker based on the defamatory nature of the information supplied by the ex-employer. That is, FINRA arbitration panels have the power to order the expungement of information in the CRD system which is defamatory in nature. See FINRA Notice to Members 99-54. Accordingly, FINRA Rule 2080, FINRA Rule 2081, FINRA Rule 12805 and FINRA Rule 13805 do not apply to intra-industry disputes, unless the information to be expunged involves customer dispute information. For example, a broker may request expungement of the reason for termination (e.g., failure to meet production standards) reported on his or her CRD record by a former employer. Because this request does not involve customer dispute information, arbitrators may recommend expungement of this information from the CRD system without addressing the standards set forth in FINRA Rule 2080 or the procedural requirements under FINRA Rule 12805 and FINRA Rule 13805.

If the arbitrators recommend expungement of non-customer dispute information and also determine that the information is defamatory in nature, FINRA will expunge the information without a court order. When requesting expungement in these situations, parties should present evidence to the arbitrators that demonstrates that the information in the broker’s CRD record is defamatory in nature, thereby portraying the broker in a negative light. If the arbitrators are satisfied that the information is defamatory in nature, they must clearly state in the award that they are recommending expungement based on the defamatory nature of the information in the CRD system. Arbitrators, however, are not required to find or to state explicitly in the award that all elements required to satisfy a claim in defamation under governing law have been met. If, however, the arbitration panel does not state that it is awarding expungement relief based on the defamatory nature of the information, then FINRA will expunge the information contained in the CRD only if the arbitration award granting expungement relief is confirmed by a court of competent jurisdiction.

What Disclosures Cannot be Expunged?

Brokers who seek to expunge disclosure events from their CRD records generally look to remove a customer dispute, employment termination, or internal review. The rules, requirements, and procedures applicable to the expungement of such events depend on the matter that the broker is trying to expunge. Occasionally, brokers will attempt to expunge an event from a disclosure category that is not eligible for expungement from the CRD system through arbitration. These disclosure categories are described in further detail below. Civil Judicial Actions

Civil judicial actions are proceedings in which a domestic or foreign court has enjoined a broker in connection with any investment-related activity; found that a broker was involved in a violation of any investment-related statutes or regulations; or dismissed, pursuant to a settlement agreement, an investment-related civil action brought against a broker by a state or foreign financial regulatory authority.

Criminal Matters

Criminal disclosures encompass charges and convictions for any felony and for those misdemeanors referenced on Forms U4 and U5, such as fraud, wrongful taking of property, or bribery.

Financial Matters

Financial disclosures involve compromises with creditors and bankruptcies occurring within the prior 10 years; a bonding company’s denial, payment on, or revocation of a bond; and any unsatisfied judgments or liens.

Investigations

The investigation disclosure category includes investigations or proceedings by a domestic or foreign governmental body or SRO with jurisdiction over investment-related businesses.

Regulatory Actions

Regulatory actions generally involve proceedings brought by a federal or state regulatory authority, foreign financial regulatory authority, or SRO. These events include actions where a regulator has made certain enumerated findings or imposed certain penalties against a broker. The regulatory action disclosure category also encompasses instances where a broker’s authorization to act as an attorney, accountant, or federal contractor has been revoked or suspended.

All of these disclosure events are ineligible for expungement from the CRD system through arbitration. Although these disclosure events cannot be expunged from the CRD system, there are certain circumstances under which they no longer will be disclosed publicly on FINRA BrokerCheck. For example, once a broker satisfies a judgment or lien, the event will be removed from FINRA BrokerCheck even though it still remains on the CRD system. As such, arbitration panels will deny all requests they receive for the expungement of any of these disclosure events. Furthermore, even if an arbitration panel’s award recommends the expungement of one or more of these ineligible disclosure events, FINRA will not remove the matter from the CRD system.

The Eligibility Rule’s Time Limit To File for Expungement

FINRA Rule 13206(a) states, in pertinent part, that “no claim shall be eligible for submission to [FINRA] arbitration . . . where six years have elapsed from the occurrence or event giving rise to the claim.” The “occurrence or event giving rise to the claim” is not always the date that a customer submitted a complaint or a broker-dealer filed a Form U5. There are many other things that can give rise to a cause of action for expungement.

Cases

22-00657 Brent Walter Ure vs. Ameriprise Financial Services, Inc.
22-00507 Ayad Amary vs. TIAA-CREF Individual & Institutional Services, LLC
21-01912 Julie Smith Johnson vs. UBS Financial Services Inc. and UBS Financial Services Inc.
21-01904 Robert George Funk vs. Merrill Lynch Pierce Fenner & Smith Inc.
21-01848 Michael Lee Escobar vs. Mutual Of Omaha Investor Services, Inc.
21-01283 Anthony J. Riscili vs. Pruco Securities, LLC.
21-01154 Michael Fillers Bolen vs. Wells Fargo Clearing Services, LLC
21-01006 Virginia Frances Thompson vs. Janney Montgomery Scott LLC, Cetera Advisor Networks LLC, Stifel, Nicolaus & Company, Incorporated, UBS Financial Services Inc., and J.P. Turner & Company, LLC
21-00914 Virginia Frances Thompson vs. Janney Montgomery Scott LLC
20-04058 Thomas Roney Chaney vs. LPL Financial LLC
20-03958 Jonathan Sard vs. Purshe Kaplan Sterling Investments
20-03458 Sean Lewis Dobranich vs. Wells Fargo Clearing Services, LLC and Wells Fargo Clearing Services, LLC
20-02828 Nicholas Joseph Meyer vs. Charles Schwab & Co., Inc.
20-02265 Michael Joseph Marshall vs. Citigroup Global Markets, Inc.
20-02262 Gerald Marvin Hast vs. Pro-Integrity Securities, Inc.
20-02267 Michael Joseph Marshall vs. J.P. Morgan Securities, LLC
20-02212 Jacob Robert Goddard vs. Ameriprise Financial Services, Inc.
19-03294 Robert Wayne Warther vs. Securities America, Inc.
22-01400 Harold Reed Madison vs. Raymond James Financial Services, Inc.
22-01753 Don Michael Rudolph vs. LPL Financial LLC

Updates

Regulatory Notice 21-09 – Broker Alert

FINRA CRD Expungement Proposed Rule Change – Broker Alert

Request a Free Consultation with a FINRA CRD Expungement Attorney

If you are a registered representative with unfair disclosure items on your FINRA BrokerCheck Report that are hindering your ability to grow your practice or find another job in the financial services industry, and would like to find out about having the unfair disclosure removed through a FINRA CRD Expungement proceeding, then request a free consultation or call 1-800-405-5117 to speak with a FINRA CRD Expungement Attorney now. Galvin Legal, PLLC is a national securities arbitration, securities mediation, securities litigation, securities regulation and compliance law practice. For more information on Galvin Legal, PLLC, please visit www.galvinlegal.com or call 1-800-405-5117.

Looking For A FINRA BrokerCheck CRD Expungement Attorney?

What are the Central Registration Depository (CRD) and FINRA Broker Check Systems?

How does FINRA CRD Expungement work?

What Disclosures Can be Expunged?

Can Customer Disputes and Complaints be Expunged?

Can the Form U5 Reason for Termination and Associated Disclosure Reporting Pages (i.e. Employment Separation After Allegations) be Expunged?

Why You Should Retain a Form U5 Negotiation Attorney Immediately Upon Being Fired or Terminated?

What Disclosures Cannot be Expunged?

The Eligibility Rule’s Time Limit To File for Expungement

Cases

Updates

Request a Free Consultation with a FINRA CRD Expungement Attorney

REQUEST A FREE CONSULTATION

RECENT INVESTOR ALERTS

Rodney Washington – Investor Alert

Kelly Thomason – Investor Alert

FINRA BrokerCheck CRD Expungement

Looking For A FINRA BrokerCheck CRD Expungement Attorney?

What are the Central Registration Depository (CRD) and FINRA Broker Check Systems?

How does FINRA CRD Expungement work?

What Disclosures Can be Expunged?

Can Customer Disputes and Complaints be Expunged?

Can the Form U5 Reason for Termination and Associated Disclosure Reporting Pages (i.e. Employment Separation After Allegations) be Expunged?

Why You Should Retain a Form U5 Negotiation Attorney Immediately Upon Being Fired or Terminated?

What Disclosures Cannot be Expunged?

The Eligibility Rule’s Time Limit To File for Expungement

Cases

Updates

Request a Free Consultation with a FINRA CRD Expungement Attorney

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REQUEST A FREE CONSULTATION

RECENT INVESTOR ALERTS