U-4/U-5 Expungement

The Financial Industry Regulatory Authority (“FINRA”) maintains the Central Registration Depository (“CRD”), a central licensing and registration system for the securities industry. The CRD contains the registration records – including the disclosure histories – of over 500,000 registered reps. Most state regulators rely on the CRD in making their licensure determinations and individual investors are encouraged by FINRA to access a broker’s CRD disclosure history through BrokerCheck when researching a broker they might hire.

FINRA’s CRD disclosure rules are over inclusive, requiring customer complaints and arbitrations to be reported regardless of whether they have any merit. Moreover since 2009, FINRA has required a broker’s U-4/U-5 to be amended even when his/her customer chooses not to name the FA as a party. The FA’s reputation is thus blemished without any corresponding ability to refute the allegation since the FA, as a non-party, has no standing to participate in the arbitration’s defense. Reportable events can remain on your record indefinitely.

Firms settle most cases – even baseless ones – due to the high cost of litigation, leaving FA’s stuck with unwarranted disclosures. A “ding” on your CRD can have serious repercussions, making it difficult for you to move to another firm, making you suspect in the eyes of the regulators, putting a target on your back with plaintiff’s lawyers and creating a negative impression for current and potential clients.

Baseless customer claims can sometimes be expunged – i.e. removed – from your CRD by an action in arbitration or court. If you want to see if your CRD can be corrected and thereby protect your reputation, we would like to help. Contact the attorneys at PCJ Law for a free, informative consultation at 901-820-4433.

Get in Touch With Us

  • Prosser, Clapper & Johnson Law 5865 Ridgeway Center Parkway, Suite 300 Memphis, Tennessee 38120
  • 901-820-4433
  • np@prosserlaw.com

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