Aug. 20, 2022
COMMENT TO PROPOSED RULE AMENDMENT For many years, I have represented customers who challenge requests for the “extraordinary relief” of expungement as well as financial advisers who have requested such relief from FINRA arbitrators when the evidence shows that the customers allegations of misconduct were false. Getting to a fair resolution of this problematic subject has been a challenge for FINRA over the years. The biggest problem is that the standards by which to judge these motions have not been implemented consistently. In its SEC filing, FINRA observed that “panels deciding straight-in requests issue Awards containing expungement relief more often than panels deciding expungement requests made in customer arbitrations.” That appears to be a significant motivation in the proposed rule amendment for requiring straight-in cases to be composed of three arbitrators from the Special Arbitrator Roster., which, when implemented, should provide a greater degree of consistency in rulings. To adapt the iconic 1992 observation of James Carville about the economy to expungement cases, “It’s the arbitrators stupid.” With that in mind, I would like to propose the following to improve the process in all customer arbitrations: In a customer arbitration in which a Respondent associated person in her/his Answer seeks expungement relief or in a customer arbitration in which the Respondent brokerage firm, in its Answer, seeks expungement relief for a non-party associated person, the list of proposed Chairpersons sent to the parties should only contain those from the Special Arbitrator Roster (as will occur for straight-in cases). Without such a requirement, expungement Awards arising out of customer arbitrations will continue to be inconsistent. It is clear to me that a great deal of thought went into FINRA’s comprehensive filing. I hope it meets with the positive responses it deserves. Respectfully Submitted, David E. Robbins Kaufmann Gildin & Robbins LLP