Jan. 7, 2021
Dear SEC Commission, January 7, 2021
As an arbitrator for FINRA who is qualified to be a Chairperson with lots of experience being a sole arbitrator for expungement cases (which I have granted and denied), I have the following comments in regard to the proposed rule changes:
1. I don't think that three (3) arbitrators are needed for these cases and the current one (1) arbitrator works fine from my perspective.
Issues: Are expungements granted to readily? Are expungement requests filed by an associated person, separate from a customer arbitration (‘‘straight-in request’’), where the associated person can choose their arbitrator leading to "more lenient" arbitrators being chosen?
Suggested Solution: Use One (1) arbitrator who has been qualified as a Chairperson and qualified by FINRA for Expungement cases. Allow FINRA to determine which arbitrator is chosen for all cases and have all cases heard telephonically unless specifically requested otherwise by the associated person when filing their request for expungement.
Reasons to Support Suggested Solution:
A. If Expungements are being granted to readily, the problem is with the arbitrators hearing the cases, not the number of Arbitrators hearing the cases. Having three arbitrators unnecessarily increases the cost for the process.
B. Having FINRA choose the Arbitrator assures that any Arbitrator who is "too lenient" cannot be continuously used. Further, besides the training by FINRA to "raise the qualifications" for an Expungement Arbitrator Roster, FINRA should have the ability to remove, (or just not choose), any Arbitrator who they feel is not doing a good job of explaining why the Arbitrator is granting expungement.
C. Having the "normal" for hearing these "straight in" requests for expungement being done telephonically, (which is what has always been requested for my expungement cases), eliminates the concern of not having enough qualified Arbitrators on the Expungement Roster for anywhere in the country. Any Arbitrator who is on any FINRA Expungement Roster would be capable of hearing the case. Further, it encapsulates what is already being done by custom and helps insure that the costs for having expungement cases heard continues to be minimized.
D. Since the Arbitrator is going to be the sole Arbitrator, they should also have the qualifications of being Chairperson so that they have experience in dealing with any issues that may arise.
2. Although it may not be applicable to the proposed Rule change, I would suggest that FINRA consider paying a sole Arbitrator (or the Chairperson) an additional amount for each occurrence that the Arbitrator is granting an expungement as this takes extra work similar to an explained decision. Further, if a "straight in" request for expungement is for more than one occurence, the Arbitrator should be paid more than what is paid for an expungement for a single occurrence.
Thank you for your consideration of the above thoughts,
Julius Z. Frager