Investor complaints and arbitrations are largely reported on industry records called Form U-4s and Form U-5s. Likewise, brokerage firms report employment terminations of brokers, including terminations involving broker misconduct, on the Form U-5. These forms are available to brokerage firms, and most of this information is also publicly available through the FINRA BrokerCheck website.

Fortunately, stockbrokers have a remedy for improper complaints, arbitrations and terminations on their Form U-4s and Form U-5s. It’s called expungement. Expungement is the process whereby an investment professional can expunge, or permanently delete, certain false, erroneous or defamatory disclosures from their industry records.

The expungement process requires the stockbroker to bring a FINRA arbitration claim against the firm or firms where the dispute arose and demonstrate to the arbitrator that the applicable FINRA expungement standard has been met.

For customer complaints and arbitrations, the stockbroker must show that:

  • the claim, allegation or information is factually impossible or clearly erroneous;
  • the registered person 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.

For employment terminations, the stockbroker must show that the statement made by the firm is “defamatory in nature.”

The arbitrator will hear the evidence and issue an arbitration award. If the arbitration award grants expungement, a number of additional steps must be taken before the item can be erased from the stockbroker’s industry records.

Weltz Law can assist industry professionals in obtaining expungement of those damaging disclosures on their Forms U-4 and U-5 in an affordable and efficient manner. Don’t let false, erroneous or defamatory disclosures remain part of your professional, publicly available CRD.

Contact us today for a free consultation.

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