Seth E. Lipner


The Financial Industry Regulatory Association (“FINRA”) maintains a database of customer complaints regarding individuals licensed by FINRA as registered representatives. Both securities regulators and the investing public can access and use the data to find out about past customer complaints of the registered representatives. However, records of customer complaints can be expunged from the database through an arbitration process that FINRA created. This Article traces the history of that arbitration process and focuses on how it is employed in cases where the investor was paid money to settle a claim. The Article studies FINRA arbitrations in such cases and reveals that customer complaints regarding claims that later settled are being expunged at the rate of 93.7%, often in perfunctory ex parte proceedings where the complainant has agreed to not oppose the application as part of the settlement. This Article concludes with a proposal for necessary changes to the expungement process in order for the FINRA database to maintain its integrity.



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.