Legal Advocacy For Illinois Businesses
FINRA Rule 2080 Specifies the Narrow Grounds for Expungement
- The claim, allegation, or information against the registered person is factually impossible or clearly erroneous;
- For example, if a broker named in a claim was not employed by the securities firm during the relevant time period, arbitrators could find that the broker was erroneously named in the claim, dismiss the claim against the broker, and recommend expungement of the claim information from the broker’s CRD record.
- The registered person was not involved in the alleged wrongful activity; or
- For example, if arbitrators find that the broker was not involved in any specified activity, there is no logical basis for keeping the claim on the broker’s CRD record, and the arbitrators may recommend expungement.
- The claim, allegation, or information against the registered person is false.
- Arbitrators can only use this standard after considering the merits of the allegations against a broker or securities firm. For example, if a customer alleged the broker made unauthorized trades, and the broker provided a document directing the trades and signed by the customer, arbitrators could find that the allegation was false.