April 21, 2014
The purpose of this letter is to provide the Securities and Exchange Commission with comments on the above referenced proposed rule change which was filed by the Financial Industry Regulatory Authority, Inc. (FINRA) on April 14, 2014.
I am an attorney whose practice is exclusively devoted to the representation of individual and institutional investors in their disputes with the securities industry. Moreover, I am a former President and current Director Emeritus of the Public Investors Arbitration Bar Association (PIABA), am the former Chairman of FINRAs National Arbitration and Mediation Committee (NAMC), am the current Chairman of FINRAs Discovery Task Force Committee (DTFC) and am a former member of the Securities Investor Protection Corporation (SIPC) Modernization Task Force.
It is my personal opinion that the adoption of Rule 2081, which would prohibit any member and/or associated person from conditioning the settlement of a dispute with a customer on, or to otherwise compensate the customer for, the customers agreement to consent to or not oppose the members and/or associated persons request to expunge such customer dispute information from the CRD system, would be beneficial – if not critical – for both the protection of public investors and the integrity of the CRD system.
At the same time, however, it must also be noted that this proposed rule does not address the multitude of other issues that are associated with the expungement of customer disputes from the registration records of associated persons – issues that, individually and/or collectively, both undermine investor confidence and threaten the protection of investors.
Thank you for providing me with the opportunity to submit my comments on this rule filing.