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FINRA’s BrokerCheck Under Fire

Samuels Yoelin Kantor LLP

Sen. Edward J. Markey, D-Mass, who was instrumental in FINRA’s development of its BrokerCheck database and a proponent of investor protection, issued a letter today to FINRA’s Chairman Richard Ketchum and forwarded to SEC Chair Mary Jo White. Senator Markey’s letter criticizes improper expungement of arbitration awards from BrokerCheck records, a practice that the Public Investors Arbitration Bar Association (PIABA) targeted in its recent expungement study. This study found that arbitrators granted expungement of the arbitration claim from the broker’s record in 90% of settled cases where the broker requested expungement. As FINRA has stated multiple times, expungement should be an “extraordinary” remedy, and the PIABA study suggests that it is almost routine. The result of this practice, as Senator Markey notes, “is to hide bad brokers from the investing public.”

The Senator also stated that he was “appalled” at a reported $51 million in arbitration awards granted to investors in 2011 that remains unpaid. “Investors are required to participate in FINRA’s arbitration program if they have a claim against their broker. If an investor successfully proves their claim but is never paid, the integrity of the entire system is threatened.”

Senator Markey’s letter can be viewed by clicking here

PIABA’s 2013 Expungement Study can be viewed by clicking here

Attorneys Robert S. Banks and Darlene Pasieczny are PIABA members with a combined experience of over 35 years in recovering investment losses nationwide.

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