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14 J. Bus. & Sec. L. 125 (2013-2014)
Has Expungement Broken Brokercheck

handle is hein.journals/bussecul14 and id is 281 raw text is: HAS EXPUNGEMENT BROKEN BROKERCHECK? Christine Lazaro2 I. HISTORY OF EXPUNGEMENT .............................. .....126 A. The Regulatory Environment .................. ......126 B. The Central Registration Depository ...................127 C. The BrokerCheck System.. ...........................130 D. Expungement of Information from the CRD and BrokerCheck.. 131 II. EXPUNGEMENT & SETTLEMENT ...........................136 A. Customer Affidavits ...................................136 B. Arbitrator Findings...............................137 III. PUBLIC INTEREST CONCERNS ............................. .....139 A. State Regulator Intervention .................. .......139 a. Maryland. .............................. ..... 140 b. New York........... ................. ...... 141 B. PIABA's Expungement Study............... .......146 IV. RECOMMENDATIONS FOR CHANGE AND CONCLUDING REMARKS ......148 Stockbrokers are subject to a comprehensive system of regulation, which was implemented at the federal level after the Great Depression. In creating it, Congress sought to re-establish investor trust in the marketplace by mandating the disclosure of material facts about investment opportunities. Today, the securities laws also call for public disclosure of information about brokers so that the public may assess whether to do business with a particular broker. Brokers have broad disclosure obligations and, unlike most other occupations, these obligations require the disclosure of even mere allegations of wrongdoing against a broker. Despite this, recent evidence indicates that the disclosures may be subverted by the systemic expungement of customer complaints from the broker's public record. Indeed, a troublingly high percentage of brokers have been able to obtain arbitrator recommendations of expungement of customer complaints from 1. The author wishes to thank Benjamin P. Edwards, Adjunct Professor ofLaw and Director of the Investor Advocacy Clinic at Michigan State University College of Law, and Francis J. Facciolo, Professor of Legal Writing and Assistant Director of the Securities Arbitration Clinic at St. John's University School of Law for their helpful comments on this paper, and Alec Coquin, St. John 's University School ofLaw ('14), for his help with citation. 2. Christine Lazaro is Director of the Securities Arbitration Clinic at St. John's University School of Law. She is also a member of PIABA and the Chair of PIABA's Legislation Committee.

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