FINRA Approves Rule That Prohibits Conditioning Settlements of Customer Disputes on Customers' Agreements Not to Oppose Expungement

The Financial Industry Regulatory Authority ("FINRA") announced that its Board of Governors approved a rule proposal that would prohibit firms and associated persons ("APs") from conditioning settlements of customer disputes on, or otherwise compensating customers for, an agreement not to oppose a request to expunge information from an AP's Central Registration Depository ("CRD") record. According to the FINRA release, the proposal is intended to help ensure that the CRD system continues to contain information that is critical to investor protection.

The rule proposal will be submitted to the SEC for review and public comment.

See: FINRA Press Release.