May 16, 2014
I am the Database Manager at Securities Arbitration Commentator, Inc. Part of my job is to maintain a database of information from securities arbitration Awards, especially those issued by FINRA. A search of our electronic files indicates that, even without the proposed rule, arbitrators are treating both stipulated and merits expungement requests more skeptically since the publication of the Expanded Expungement Guidance in October 2013 than before it.
In the first nine months of 2013, prior to FINRA's Expanded Expungement Guidance, arbitrators recommended expungement in 231 out of 247 stipulated Awards, or 94% of the time. In the six months from Nov. 1, 2013 through April 30, 2014, on the other hand, an expungement request was successful in only 110 out of 132 stipulated Awards, an 83% rate. Thus, a difference of 11% has emerged since the issuance of the new Guidance.
In the case of non-stipulated Awards, in the first nine months of 2013, arbitrators recommended expungement in 86 out of 158 Awards, or 54% of the time. In the six calendar months from Nov. 2013 to Apr. 2014, expungement requests were successful in only 39 out of 91 cases, or 43% of the Awards, once again an 11% difference. This latter change is particularly notable because concerns about non-stipulated Awards are evidently not a motivating factor in the adoption of the new rule.
If FINRA proceeds to adopt the new rule and the time comes that anyone seeks to measure its effect, the foregoing statistics should be the yardstick by which any impact is measured.
Harry A. Jacobowitz, Esq.