FINRA Proposes Rule Regarding Prohibited Conditions Relating to Expungement of Customer Dispute Information

FINRA filed with the SEC a proposed rule change to adopt FINRA Rule 2081, which would permit member firms and associated persons from conditioning or seeking to condition the settlement of a dispute with a customer on, or otherwise to compensate the customer for, the customer's agreement to consent to, or not to oppose, the firm's or associated person's request to expunge such customer dispute information from the Central Registration Depository ("CRD").

Specifically, FINRA Rule 2081 would provide that no member or associated person shall condition or seek to condition the settlement of a dispute with a customer on, or to otherwise compensate the customer for, the customer's agreement to consent to, or not to oppose, the member's or associated person's request to expunge such customer dispute information from the CRD system. The proposal would apply both to oral and written agreements entered into during the course of settlement negotiations, as well as to any agreements entered into separately from such negotiations.

See: Text of Proposed Rule Change.