Expungement Obtained of Two 7+ Year Old Customer Complaints from Former Broker’s Record

In 2019, the Law Offices of Montgomery G. Griffin (“LOMGG”) successfully obtained expungement of two dated customer complaints from the FINRA CRD/BrokerCheck Record of a former registered representative (“Client”) who was in the process of relaunching her career as a Certified Financial Planner.  Both complaints were placed on the Client’s record as a result of her name being mentioned in complaints that were focused against another broker and brokerage firm with whom she previously worked. Further, the complaints related to losses in real estate-based investments during the Great Recession, and neither of the complaints specified any allegations of wrongdoing against the Client personally.

Due to the fact that the complaints were over 7 years old, there was exceptional procedural complexity to the expungement process, including that (a) LOMGG’s Client lacked documents related to the complaints due to the passage of time, and (b) the whereabouts of the prior complainants was unknown.  Further, there was a settlement agreement in one case that was subject to a confidentiality agreement and to which the Client was not a party. All of these factors complicated the expungement process because it was the Client’s burden under FINRA’s Expungement Rule to demonstrate the nature of the complaints, give notice to the prior complainants, and provide any settlement agreements related to the complaints.  Ultimately, through a combination of third-party discovery, research, and procedural creativity, the LOMGG was able to craft solutions for each issue and, through an evidentiary arbitration hearing at FINRA, demonstrate that expungement was warranted. In accordance with the LOMGG’s proposal, and consistent with evidence presented to FINRA, the FINRA arbitrator found that, with regard to both prior complaints, “the registered representative was not involved in the alleged investment-related sales practice violation.”   

Although the LOMGG was proud to obtain this result for the Client, it is noteworthy that the LOMGG is extremely selective in taking on expungement cases on behalf of registered representatives.  The LOMGG takes such cases only when it believes that expungement is strongly merited and the LOMGG is convinced of the integrity of the registered representative—as the firm was in the case discussed above.  Too often, expungement is granted in cases where it is not merited and the registered representative seeking expungement poses a threat to the investor community, which undermines investors’ rights and the integrity of the FINRA CRD/BrokerCheck system.  Indeed, the LOMGG has seen proceedings where expungement was egregiously granted by FINRA arbitrators despite indisputable evidence that the registered representative’s conduct was centrally at issue in the customer complaint and that the complaint had resulted in a seven-figure settlement.