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FINRA Rules 12805 and 13805

Rules 12805 and 13805 Detail Procedures Arbitrators Must Follow Before Recommending Expungement:

 

Pursuant to the rules, there will be a recorded expungement hearing session by telephone or in person (which can be held during the evidentiary hearing; otherwise, it must be in a separate hearing to request expungement).  A hearing is required, even if the other party doesn’t object to expungement.  The broker or firm requesting expungement must demonstrate a basis for such under one of the Rule 2080 grounds

 

  • Unnamed Brokers. If the unnamed broker didn’t testify during the evidentiary hearing, arbitrators may need to seek testimony and documentary evidence during a separate expungement hearing

 

  • Settled Cases. Expungement hearings for settled cases have special considerations. Arbitrators review settlement documents and terms, and must allow customers and their counsel to participate, if they wish—including appearing at the hearing, providing customer testimony, introducing documents and evidence, cross-examining the broker and witnesses called by the party seeking expungement, and presenting opening and closing arguments if the panel allows any.

 

Expungement-Only Hearings: In certain circumstances, a registered representative may file an arbitration against a FINRA member seeking expungement without naming the customer as a respondent. To ensure customers know about the expungement request in these types of cases, the registered representative or claimant will typically be ordered to provide the Statement of Claim to the customer or customers involved in the customer dispute, along with notice of the date and location of the hearing, and of the customer’s right to appear and participate in the hearing.