SIFMA Calls on SEC to Grant Remedial Relief for Proposed FINRA Rule on Expungement

SIFMA requested that the SEC grant immediate remedial relief for a proposed FINRA rule on the grounds that FINRA misstated the requirements for expungement. SIFMA asserted that the language of a proposed FINRA rule to amend the Code of Arbitration Procedure regarding requests for expungement contradicts existing FINRA rules.

According to SIFMA, FINRA stated that under Rules 12805(c) and 13805(c) on the expungement of customer dispute information, arbitrators must justify their expungement using one of the three provisions under FINRA Rule 2080(b)(1): error, mistake or falsity. However, SIFMA noted that the grounds for granting expungement are not limited to Rule 2080(b)(1), but also include those listed under FINRA Rule 2080(b)(2). Further, SIFMA asserted that FINRA did not provide the public an opportunity to submit comments on the proposed rule, and stated that FINRA has not given indication a correction is forthcoming.

SIFMA asked the SEC to grant immediate remedial relief, to include a cease-and-desist from continuing to misstate the grounds for expungement as well as publication of corrected materials (i.e., notices to members, training materials and other documentation involving the relevant FINRA rules).