FINRA intra-industry expungement is the process of removing information from the Central Registration Depository (CRD) system that is defamatory or inaccurate. This process can be initiated by an associated person (AP) or firm that is the subject of the information, or by a customer who believes that the information is inaccurate.
To be eligible for expungement, the information must meet the following criteria:
It must be defamatory or inaccurate;
It must be contained in the CRD system;
It must be related to an intra-industry dispute; and
It must not involve any customer dispute information.
If an AP or firm believes that information in their CRD record is defamatory or inaccurate, they can file an expungement request with FINRA. The request must be in writing and must include specific information about the information that is being challenged. FINRA will then appoint a panel of arbitrators to review the request.
If the arbitrators determine that the information is defamatory or inaccurate, they will issue an award recommending that FINRA expunge the information from the CRD system. FINRA will then typically expunge the information without requiring a court order.
Customers who believe that information in a broker's CRD record is inaccurate can also file an expungement request. However, customers must name FINRA as a party in any court proceeding seeking or confirming expungement relief. FINRA will only expunge customer dispute information from CRD by court order.
FINRA has a policy of generally opposing confirmation of the expungement portion of an arbitration award in most cases where it participates in the judicial proceeding. However, FINRA will expunge information from the CRD system without judicial intervention if the expungement directives contained in intra-industry awards that involve associated persons and firms are based on the defamatory nature of the information ordered expunged and do not involve any customer dispute information.
Here are some examples of information that may be eligible for expungement under FINRA intra-industry expungement rules:
A settlement agreement that contains a provision prohibiting the parties from disclosing the terms of the agreement.
A disciplinary proceeding that was dismissed or settled.
A complaint that was filed against an AP or firm but was not substantiated.
A news article that contains false or misleading information about an AP or firm.
If you are considering filing an expungement request, it is important to consult with an experienced securities attorney to discuss your specific circumstances.