WWW.ABSTRACT.XLIBX.INFO
FREE ELECTRONIC LIBRARY - Abstract, dissertation, book
 
<< HOME
CONTACTS



Pages:     | 1 |   ...   | 5 | 6 || 8 |

«NOTE WHAT YOU DO NOT KNOW CAN HURT YOU: HOW THE FINRA EXPUNGEMENT PROCESS IS ENDANGERING FUTURE INVESTORS THROUGH A LACK OF INFORMATION I. ...»

-- [ Page 7 ] --

1254 HOFSTRA LAW REVIEW [Vol. 42:1227 (d) If FINRA waives its obligation to be named as an additional party it must provide a brief written explanation indicating which finding they based their decision on as well as a description supported by evidence or testimony as to why the (c)(1)(A)–(C) or (c)(2)(A) finding was applicable.216 The general purpose behind the modified Rule 2080 proposal is to ensure more substantive involvement from FINRA throughout the process.217 Requiring FINRA’s review prior to the expungement motion being sent to the arbitrators ensures FINRA’s understanding of all expungement cases before they begin, instead of after the award is granted as it is under the current system.218 While the addition of proposed Rule 2080(b) leaves the decision of whether to completely interject up to FINRA, requiring FINRA to make itself more knowledgeable regarding all expungement claims will benefit the entire process.219 The ultimate rationale behind the proposed Rule 2080(c), currently Rule 2080(b), is to help alleviate the previously identified issue of unclear guidelines.220 Further, as also discussed, the most critical issue currently facing FINRA is the rate at which expungements are being granted as a result of settlement agreements.221 Moreover, expungement agreements via settlement present the strongest possibility for deception and non-merited expungements.222 The proposal is not requiring FINRA to be involved in every proceeding, only those involving settlement agreements.223 Moreover, if FINRA’s purpose is truly to protect investors, it will need to devote the resources necessary to remain informed of proceedings involving settlements in order to prevent the continued expungement of valuable CRD information.224

216. The current Rule 2080(c) remains unchanged and becomes 2080(e) in this proposal.

217. See supra notes 197-211 and accompanying text.

218. See Ilgenfritz, supra note 3, at 362 (explaining FINRA’s current process of receiving a motion for expungement relief, not reviewing it, and sending a copy to the arbitration panel).

219. See id. at 363 (arguing FINRA does not currently play an active enough role and must make itself more knowledgeable); Lipner, supra note 12, at 103 (arguing FINRA must insert itself into the dispute earlier to become more knowledgeable).

220. See supra Part III.B.

221. See supra Part III.A.1.

222. See supra Part III.A.

223. See supra note 212 and accompanying text.

224. Ilgenfritz, supra note 3, at 362 (suggesting similar review from FINRA to return expungement to an extraordinary remedy). The recently submitted proposal to the SEC is a step in the right direction. See Proposed Rule Change to Adopt FINRA Rule 2081, supra note 119; see also Jean Eaglesham & Rob Barry, U.S. Aims to Fix Broker Records, WALL ST. J. (Apr. 16, 2014), http://online.wsj.com/news/articles/SB30001424052702303887804579503653564597512?.mg=ren o64wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle$2FSB3000142405270230388780457950 3653564597512.html (indicating that FINRA may propose a rule change that will require firms to 2014] FINRA EXPUNGEMENT PROCESS 1255 The purpose of narrowing the guidelines under which FINRA may excuse itself is to provide further clarity.225 It is important for all parties involved to understand under what circumstances FINRA may remove itself as a party.226 Moreover, it is important for FINRA to consider whether monetary compensation was given, as firms do not typically pay out sums of money where claims are clearly erroneous or factually impossible.227 The desire to get further understanding out of FINRA is aided by the addition of Rule 2080(d), which requires a written explanation.228 As FINRA requires the arbitrator to provide a written explanation, FINRA should not be exempt from the same practice.229 Providing a written explanation—supported by factual evidence— further protects against the rubber-stamping of awards.230 The proposed modifications to Rule 2080 serve the initial purpose of gaining more extensive FINRA participation in the expungement process.231 FINRA’s current lack of participation has resulted in the absence of guidance and thoroughness within arbitration panels.232 A modified Rule 2080 can not change the process on its own, though; thus, a modification to the current Rule 12805 instituting stricter guidelines to grant expungements is necessary as well.233 B. Modifying Current Rule 12805 Along with the current Rule 2080, its companion Rule 12805 must be adjusted as well, to ensure that the expungement process is further improved.234 As it currently stands, the guidelines of Rule 12805 do not provide enough significant concrete direction for an arbitration panel to follow.235 While certain aspects of Rule 12805 will remain in the perform background checks on all brokers to ensure better accuracy of information on the CRD).

225. See supra text accompanying notes 208-16 (outlining the text of the proposed rule).

226. See supra notes 174-81 and accompanying text (discussing the issue of unclear guidelines).

227. See Ilgenfritz, supra note 3, at 362.

228. See supra text accompanying note 216.

229. FINRA MANUAL R. 12805(c) (2011) (requiring a written explanation from the arbitrator).

230. See Ilgenfritz, supra note 3, at 361 (identifying rubber-stamping as an adverse effect on the current CRD system); Lipner, supra note 12, at 62 (acknowledging the current issue with rubber-stamping awards).





231. See supra text accompanying notes 197-200 (outlining the issues with FINRA’s current participation in the expungement process); see also supra text accompanying notes 208-16 (outlining the proposed rule).

232. See supra Part III.B.

233. See infra Part IV.B.

234. See infra text accompanying notes 240-79 (proposing new provisions of Rule 12805).

235. See Ilgenfritz, supra note 3, at 362 (showing the widespread sentiment that arbitrators are not adequately following the procedures outlined in FINRA’s rules, and thus, not affording the proper level of importance to what they decide to expunge and take off the CRD); Lipner, supra 1256 HOFSTRA LAW REVIEW [Vol. 42:1227 proposed role,236 the general rule must be restructured in order to ensure that investor safety remains FINRA’s number one priority.237 The need for change stems from the initial clause’s lack of requirement for both the claimant to be involved in the hearing, and the claimant not being required to testify.238 The following is a proposed re-draft of Rule 12805(a):239 (a) Hold a recorded hearing session (by telephone or in person) regarding the appropriateness of expungement,240 where both the party seeking expungement and the customer responsible for the original claim, or the customer’s attorney, are present. This paragraph will apply to cases administered under Rule 12800, even if a customer did not request a hearing on the merits. The recorded hearing must be conducted pursuant to each of the following

subparagraphs:

(1) The arbitrator(s) must question each party under oath regarding the potential expungement award and record all testimony;241 and (2) If the claim involves an agreed upon settlement between the parties, the arbitrator(s) must question the customer, or the customer’s attorney, as to why expungement was agreed to and, if applicable, why the customer’s attorney agreed to dismiss the claim.242 Requiring customers, or the customer’s attorney, to be present for all hearings, even if they did not request such a hearing, prevents the party seeking expungement from dominating the fact-finding process.243 Further, the addition of required testimony will allow arbitrators to delve further into the facts of the case.244 This additional information will ideally uncover any situation where the expungement-seeking party note 12, at 103-04 (going as far as suggesting that the current system with arbitrators is so flawed, arbitrators should be removed entirely).

236. See infra note 240 (identifying the carried-over text from the original Rule 12805).

237. See infra text accompanying notes 238-79; see also supra text accompanying note 58 (identifying investor protection as primary purpose).

238. See FINRA MANUAL R. 12805(a) (2011); Lipner, supra note 12, at 99 (identifying Barker v. Securities America, Inc., and describing the peculiar absence of testimony, alluding to its necessity but not going so far as to make it a requirement) (citing In re Barker v. Sec. Am., Inc., No.

12-01305, 2013 WL 595840 (FINRA Aug. 15, 2013) (Connett, Arb.)).

239. Modifications and additions to the current clause are indicated in italics.

240. FINRA MANUAL R. 12805(a) (2011).

241. See Lipner, supra note 12, at 97-98 (suggesting the need for testimony).

242. See id. at 98 (agreeing that no ex parte hearing will ever be successful).

243. See supra text accompanying notes 178-81.

244. See Lipner, supra note 12, at 97-98 (noting that the hearing is usually only attended by party seeking expungement, meaning the arbitration panel only hears one-sided evidence, which is insufficient to make expungement decisions).

2014] FINRA EXPUNGEMENT PROCESS 1257 attempted to coerce the customer into a settlement agreement contingent on not opposing the broker’s expungement request.245 There are, understandably, possible issues and concerns, primarily on behalf of the customer and his attorney, with requiring customer participation in the hearing.246 However, action must be taken to prevent the continued practice of brokers attending expungement hearings unopposed.247 It is predictable that no investor would put himself through further hearings or pay more attorneys’ fees in a case where he has already received his compensation.248 A potential solution to the attorney fee issue would be for the broker seeking expungement to pay the portion of attorney fees required by the expungement hearing.249 An arbitrator’s responsibility to hear a full disclosure of evidence is critically important,250 and thus the reason for making the customer’s presence at the hearing a requirement.251 The second clause in Rule 12805 pertains to arguably the biggest issue within the current expungement process—awards deriving from settlement agreements.252 As previously addressed, granting an expungement award based on a settlement agreement between the two parties presents a multitude of dilemmas; most important is the threat of necessary and valuable information being wrongfully expunged from the CRD.253 Keeping with the current structure of Rule 12805(b), this Note proposes the following significant additions and modifications to make the clause more effective in preventing the undeserved expungement of customer dispute information:254 (b) In cases involving settlements, in addition to testimony requirements outlined in paragraph (a), arbitrator(s) must review settlement documents and consider the amount of payments made to any party and any other terms and conditions of settlement.

245. See supra note 119 and accompanying text (identifying FINRA’s recent movement to deter such conduct).

246. See supra text accompanying notes 178-81 (outlining arguments for customer participation).

247. See Lipner, supra note 12, at 97-98 (outlining the consequences of brokers attending hearings unopposed).

248. See id. at 88; see also Elisofon, supra note 20, at 3 (understanding the customer’s mindset—brokers are able to take advantage of customers when offering monetary compensation through settlement).

249. See infra text accompanying and immediately following note 277 (proposing a new section (d)(1) to Rule 12805).

250. See Lipner, supra note 12, at 98 (continuing absence of investor’s attorney under current rules likely leads to the burying of the truth).

251. See infra text following note 254 (identifying text of proposed rule).

252. See supra Part III.A.

253. See supra Part III.A.

254. All modifications and additions to the current clause are indicated in italics.

1258 HOFSTRA LAW REVIEW [Vol. 42:1227 Arbitrator(s) must also coordinate with FINRA on all cases involving settlements pursuant to each of the following

subparagraphs:

(1) FINRA must receive all settlement documents, testimony, and any other applicable evidence from the arbitration panel prior to the panel confirming any grant of expungement;255 and (2) The arbitration panel must provide FINRA with its recommendation on whether expungement is appropriate and FINRA will control the final determination of whether such a recommendation is confirmed or denied; and (3) FINRA’s review of the case prior to making a final

determination must include:

(A) Review of all documents provided by the arbitration panel, including listening to the recorded hearing; and (B) Speak with the arbitration panel, either in person or telephonically, regarding their rationale behind recommendation and ascertain whether all required protocols were followed; and (C) If determined to be necessary by FINRA, conduct a follow-up meeting, either telephonically or in person, with both parties to discuss relevant evidence and determine whether reason for settlement was coerced during settlement negotiations.

(i) If FINRA determines settlement was obtained through coercion or bad faith during negotiations, FINRA must immediately reject the request for expungement and dismiss the claim.

While the changes this proposal makes to the current Rule 12805(b) are drastic, the current expungement landscape calls for such wholesale changes.256 Requiring that FINRA control the final determination of expungement awards on all claims involving settlements not only removes the possibility of arbitrators rubber-stamping expungement awards, but it also ensures a stricter approach that ideally tips the scales back in favor of investor protection.257 Further, while instituting three separate FINRA requirements prior to making a final determination may appear excessive, the current industry sentiment towards FINRA’s

255. See Lipner, supra note 12, at 103 (suggesting similar disclosure of documents to ensure state regulators have time to object).

256. See supra Part III.A–B.

257. See Ilgenfritz, supra note 3, at 361 (identifying rubber-stamping as current problem);



Pages:     | 1 |   ...   | 5 | 6 || 8 |


Similar works:

«1 Moralisches Handeln Pflegender in der Schmerztherapie junger Säuglinge Hildegard Streyl Dipl.-Pflegepädagogin (FH) Dipl.-Pflegewirtin (FH) Kinderklinik der Johannes Gutenberg-Universität Mainz Zusammenfassung Die schmerztherapeutische Versorgung junger Säuglinge muss immer noch als äußerst defizitär beschrieben werden. Auch Pflegende können ihrer moralischen Verantwortung in der pädiatrischen Schmerztherapie nicht gerecht werden. Forschungsstudien lassen ursächlich nicht nur...»

«THE PAINFUL STATE OF PLEASURE IN CHARLOTTE BRONTË’S JANE EYRE by Michelle Cannon A Thesis submitted to the Faculty of The Wilkes Honors College In Partial Fulfillment of the Requirements for the Degree of Bachelor of Arts in Liberal Arts and Sciences With a concentration in English Literature Wilkes Honors College of Florida Atlantic University Jupiter, Florida December 2008 THE PAINFUL STATE OF PLEASURE IN CHARLOTTE BRONTË’S JANE EYRE by Michelle Cannon This thesis was prepared under the...»

«CV – Tobias H. Stark CURRICULUM VITAE Tobias H. Stark June 16, 2015 CONTACT Utrecht University European Research Centre on Migration and Ethnic Relations Phone: + 31 (0)30 253 7786 Padualaan 14 3584 CH Utrecht Email: T.H.Stark@uu.nl The Netherlands http://www.tobiasstark.nl SCIENTIFIC EDUCATION 2011 Ph.D. in Sociology (cum laude highest distinction in the Netherlands), University of Groningen, the Netherlands Promoters: Andreas Flache, Roel Bosker, and René Veenstra Ph.D. thesis received a...»

«Virtual mentor and media structuralization theory Item type text; Dissertation-Reproduction (electronic) Authors Zhang, Dongsong Publisher The University of Arizona. Rights Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author. Downloaded 7-May-2016...»

«Divorce and Annulments By Greg Witherow Protestants and Catholics differ on whether marriage is permanent. Protestants hold that Christian marriage should be permanent (until death) under the right circumstances. In contrast Catholics hold that Christian1 marriage is always permanent (until death) under all circumstances. This disagreement is more than conflicting interpretations of scripture. Sadly, in many cases it is an example of Protestant abandonment of the Bible’s teaching on divorce...»

«Notunterkünfte und Wohnungsbauprogramme in Katastrophengebieten: Wie viel Wohnung braucht der Mensch? Herausgegeben von Deutscher Caritasverband e.V. Caritas international Postfach 420 79004 Freiburg Tel. 0761/200-288 Fax 0761/200-730 E-Mail : contact@caritas-international.de www.caritas-international.de August 2009 Inhalt Vorwort 7 1. Einleitung: 9 1.1 Ziel des Fachpapiers 9 1.2 Zur Bedeutung von „Shelter“ und „Housing“ Programmen im Kontext von Katastrophen 10 1.3 Ziele von...»

«APPLICATION FOR AN AMUSEMENT RIDE OPERATING PERMIT [Section 14 of the Amusement Rides Safety Act (Chapter 6A)] Commissioner of Amusement Rides Safety INSTRUCTIONS Building & Construction Authority (1) One copy of this form is to be submitted. (2) If an item is not applicable it is to be indicated as “N/A”. 52 Jurong Gateway Road, #11-01 Singapore 608550 (3) * Delete accordingly. Website: http://www.bca.gov.sg/ (4) Please tick () in the appropriate boxes. SECTION A (To be completed by...»

«Tad Suiter Prospectus Untitled Dissertation Proposal “Yeah, with a bunch of fellows on the corner. I’d say, ‘Dick Tracy is in another scrape; I wonder how he’ll get out of it.’ Of course we all laugh at it. And a guy will say, ‘Bet you half a dollar he gets out of it.’” Construction worker, age thirty-one “The other things I just read in case of conversation. When someone talks about them, you’ll know about them. Almost everybody reads the comics. Somebody says, ‘Did you...»

«Miracle or Magic? The Problematic Status of Christian Amulets John L. Crow Introduction In 1171 C.E., Hugh de Puiset, bishop of Durham, hired an engineer named Richard to repair and enlarge Norham Castle in Northumberland. Richard, a respected local land owner, wore a silk sack from his neck that contained a number of small parchment amulets, or phylacteries, which contained the names of God, and also extracts from the Bible, including portions of the Gospels. He wore these amulets as a means...»

«Principles and Benefits of Binder-free Pigment Grinds for Water-based Printing Inks Authors: Kathrin Lehmann Susanne Struck Angela Rüttgerodt Company: Tego Chemie Service GmbH Goldschmidtstrasse 100 45127 Essen Germany Tel.: +49 201 173 2344 Fax: +49 201 173 1881 Introduction Pigment grinding is the vital step in printing ink production for all the ink manufacturers who do not buy ready-made pigment concentrates. During grinding the pigments have to be dispersed, wetted and stabilised properly...»

«Elektromobilität 11 ‐ 2013    ELEKTROMOBILITÄT   EMO  TecScan Journal Editorial   Liebe Leserinnen und Leser, als Abonnent der TecScan-Journale werden Sie nicht nur mit dem aktuellen Stand der Technik versorgt, sondern Sie erkennen Trends und Entwicklungen schon früh und können diese Informationen für Innovationen nutzen. Wir bieten die TecScan-Journale in zwei verschiedenen Lieferformen an, als gedruckte und als PDF-Ausgabe, um den unterschiedlichen Vorlieben und...»

«INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES WASHINGTON, D.C. In the annulment proceeding between DAIMLER FINANCIAL SERVICES A.G. Applicant and REPUBLIC OF ARGENTINA Respondent ICSID Case No. ARB/05/1 DECISION ON ANNULMENT Members of the ad hoc Committee Eduardo Zuleta, Chairman Florentino Feliciano, Member Makhdoom Ali Khan, Member Secretary of the Tribunal Anneliese Fleckenstein Date of dispatch to the Parties: January 7, 2015 REPRESENTATION OF THE PARTIES Representing Daimler...»





 
<<  HOME   |    CONTACTS
2016 www.abstract.xlibx.info - Free e-library - Abstract, dissertation, book

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.