Obviously, the decision to expunge complaints from brokers’ records will always remain somewhat controversial. Almost all client/broker contracts have a clause that sends client complaints to an arbitration board before allowing public complaints; and this appears fair to both clients and brokers. Future clients certainly deserve a warning about brokers who haven’t acted in their client’s best interest; however, there are some cases that arise from situations that the broker could never have prevented.
Among other decisions about a particular dispute, FINRA arbitrators will decide if a broker gets a complaint listed on the BrokerCheck profile. The arbitration board needs to decide these cases fairly, and they certainly must weigh concerns about how complaints can damage a broker’s business against a consumer’s right to fair warnings about a broker’s methods.
Hugh Berskon’s Take on FINRA Expungement Decisions
On a positive note, according to Investment News, many recent arbitration decisions have been accompanied by longer explanations from the FINRA Arbitration board. At the same time, one the partners here at McCarthy, Lebit, Crystal, & Liffman, Hugh Berkson was quoted in that Investment News article as he expressed concerns that this seemingly positive trend may not go far enough. It’s worthwhile to note Public Investors Arbitration Bar Association studies that report close to a 90-percent approval rate when brokers ask for expungement. Our partner, Mr. Berskon, has also served as a president of that association in the past.
Mr. Berkson said that longer explanations may be positive; however, he’s not as concerned so much with the length of the explanation as having that explanation describe a correct decision. He hopes that providing more in-depth summaries will also force arbitrators to consider their choices more fully. He also remarked that he gave credit to FINRA for giving arbitrators more explicit instructions to help guide them than they had in the past.
In short, he believed that these trends towards longer explanations could be positive if they led to well-considered decisions and more information to guide all parties involved in the case. On the other hand, he expressed concerns that these positive developments would not necessarily arise out of the changes.
Hugh Berkson is a Securities Attorney with McCarthy, Lebit, Crystal & Liffman, Co. LPA. Hugh is rated AV® Preeminent™ by Martindale-Hubbell®.
He obtained a business degree in Finance from the University of Texas at Austin in 1989, and is a 1994 graduate of Case Western Reserve University School of Law, where he was a member of the Order of the Barristers and received both the American Jurisprudence Award, (National Mock Trial) in 1993 and the Jonathan M. Ault Mock Trial Prize for 1993-1994.
