FINRA Requests Comment on Proposed New In re Expungement Procedures for Persons Not Named in a Customer-Initiated Arbitration

FINRA Reg. Notice 12-18

FINRA is requesting comment on proposed new rules that would permit persons who are the "subject of" allegations of sales practice violations made in arbitration claims, but who are not named as parties to the arbitration (unnamed persons), to seek expungement relief by initiating In re expungement proceedings at the conclusion of the underlying customer-initiated arbitration case. These allegations must be reported in the same way that customer complaints are reported-to the Central Registration Depository (CRDreg;) system on Forms U4 or U5. Currently, the Code of Arbitration Procedure for Customer Disputes (Customer Code) and the Code of Arbitration Procedure for Industry Disputes (Industry Code) do not provide unnamed persons with express procedures to seek expungement of these types of allegations.

Comments Due: May 21, 2012

Cross References: FINRA Rules 12100(z), 12806, 13100(cc), 13806 and 13807; FINRA Rule 2080; Regulatory Notice 09-23 (re: forms UF U5); NASD NTM 03-73.

For more information about this document, you may contact one of the following Cadwalader attorneys: Steven D. Lofchie; Bradley J. Bondi.