Bill Singer's Comment: One of the most misunderstood policies on Wall Street is that the route to obtaining an expungement of CRD information is available via two paths. Among the most pervasive of all industry myths is that a CRD expungement may only be "recommended" by a FINRA Arbitration Panel and, thereafter, confirmed by a court. In reality, those seeking expungements are not limited to the relief afforded solely through arbitration but may directly apply for a court order.

Bill Singer's Comment: If you opt for the Court-Order-route or you have obtained an arbitration award containing expungement relief (frankly, the Rule should more accurately denote this as a recommendation of expungement from an Arbitration Panel), you are required to name FINRA as an additional party in your petition to a court and you must further serve FINRA in its role as a party.

(1) Upon request, FINRA may waive the obligation to name FINRA as a party if FINRA determines that the expungement relief is based on affirmative judicial or arbitral findings that:

Bill Singer's Comment: Notwithstanding that Rule 2080 mandates naming FINRA as a party, a waiver process exists by which the self-regulatory organization may relieve you of the need to name-and-serve it provided that there are judicial/arbitral "findings," which are further detailed

(A) the claim, allegation or information is factually impossible or clearly erroneous; 

(B) the registered person was not involved in the alleged investment-related sales practice violation, forgery, theft, misappropriation or conversion of funds; or

(C) the claim, allegation or information is false.

Bill Singer's Comment: A waiver of name/service may be predicated upon a finding that:

(A) the cited customer claim/allegation/information is factually impossible or clearly erroneous. If you are proceeding with your expungement case pro se (without a lawyer), make sure that you specifically seek a favorable ruling in which the magic words "factually impossible or clearly erroneous" are set forth.

Examples of what might be considered "factually impossible or clearly erroneous" would be if you were named as employed by member firm X in 2015 but had either never been employed by that firm or had resigned in 2011; or

(B) the petitioning registered person was not involved in the specified allegations of investment-related sales practice violation, forgery, theft, misappropriation, or conversion of funds. If you are proceeding with your expungement case pro se, make sure that you specifically seek a favorable ruling in which you are pointedly exonerated via the specific conduct set forth in the Rule.

(C) you may need to research the elements of what constitutes forgery, theft, or conversion and argue that although you did, in fact, commit the alleged acts A, B, and C, that they do not rise to the level of the crime or tort indicated. For example, you may have "signed" a customer's signature but did so with her authorization because her hand was broken at the time. Such conduct could still be a violation of your firm's written supervisory policies but would not necessarily constitute a "forgery," which usually occurs without the prior knowledge and consent of the individual whose signature is in dispute. Similarly, you may need to prove that a client gave you a gift of cash that was never intended as a loan and, consequently, you did not convert his money. Again, accepting such a gift could be a violation of industry rules and policies but might not satisfy the legal definition of conversion.

(2) If the expungement relief is based on judicial or arbitral findings other than those described above, FINRA, in its sole discretion and under extraordinary circumstances, also may waive the obligation to name FINRA as a party if it determines that:

(A) the expungement relief and accompanying findings on which it is based are meritorious; and

(B) the expungement would have no material adverse effect on investor protection, the integrity of the CRD system or regulatory requirements.

Bill Singer's Comment: Nothing like a rule that says you may obtain relief subject to a regulator's "sole discretion" and based upon what that regulator deems to be "extraordinary circumstances." Tough to imagine a more loaded set of dice. If FINRA denies your request for the waiver, it's going to be tough to appeal because Rule 2080 pretty much permits FINRA to dismiss any appeal with the rationale that its ruling is as it is "because we say so."

Regardless of the naked discretion arrogated by the self-regulator, FINRA may grant you a waiver of the name/service requirement if your relief is deemed "meritorious" and would not materially and negatively impact investor protection, the integrity of CRD, or contravene regulatory requirements.

Bill Singer's Comment: Would it not have been a preferred rule-making approach to offer the definition of those three key concepts in the body of Rule 2080? Does it truly make any sense to now send readers on a scavenger hunt?

One of the most glaring problems with Rule 2080(c) is its false premise that the Form U4 provides the referenced definitions. If you examine a copy of a U4 and you will see that few, if any, italicized or other important terms are defined "in" the Form. Additionally, the "General Instructions" portion of the Form U4 do not offer any of the definition of the three terms.

There is this oddball page of information floating around in cyberspace. If you locate it, you will see that it is housed on FINRA's website and offers explanations of terms in the Forms U4, U5, BD, BDW, and BR. What you could do, is find this online FINRA page. This document is something separate and apart from the various forms and is certainly not providing "definitions" that are physically "in" the various Forms.  By way of guidance, this is what is currently provided under "Form U4 Explanation of Terms":

Sales Practice Violations: Shall include any conduct directed at or involving a customer which would constitute a violation of: any rules for which a person could be disciplined by any self-regulatory organization; any provision of the Securities Exchange Act of 1934; or any state statute prohibiting fraudulent conduct in connection with the offer,

Investment-Related: Pertains to securities, commodities, banking, insurance, or real estate (including, but not limited to, acting as or being associated with a broker-dealer, issuer, investment company, investment adviser, futures sponsor, bank, or savings association).

Involved: Means doing an act or aiding, abetting, counseling, commanding, inducing, conspiring with or failing reasonably to supervise another in doing an act.

Bill Singer's Comment: A "NO" means "NO" rule. A rare but commendable example of a concise and lucid FINRA Rule. You cannot negotiate a customer's consent or non-opposition to a future expungement request as a condition for settling a customer dispute.