A broker-dealer settled FINRA charges for violating FINRA Rule 2081 ("Prohibited Conditions Relating to Expungement of Customer Dispute").
In a Letter of Acceptance, Waiver and Consent, FINRA found that the broker-dealer signed an arbitration settlement agreement with a customer providing that the customer would not oppose, or otherwise interfere with, a request to expunge the dispute information from the Central Registration Depository ("CRD") System. FINRA found that the broker-dealer "inadvertently" failed to remove the provision permitting expungement from the CRD of the complaint against the broker-dealer's registered representative before entering into the FINRA arbitration settlement agreement.
As a result of its findings, FINRA determined that the broker-dealer violated FINRA Rules 2081 and 2010 ("Standards of Commercial Honor and Principles of Trade").
To settle the charges, the broker-dealer agreed to (i) a censure and (ii) a $20,000 fine.
Commentary
FINRA Rule 2081 expressly prohibits a broker-dealer from entering into a settlement agreement of the type that is the subject of this enforcement action. The broker-dealer was charged with violating that rule and agreed to a disciplinary action for such violation.
What purpose does the additional charge under Rule 2010 ("Standards of Commercial Honor and Principles of Trade") serve? FINRA has developed the practice of adding on a Rule 2010 violation to almost every single enforcement action. The Rule should be retitled the "Prohibition against Violating Pretty Much Any Other FINRA Rule." Or, if that is all Rule 2010 means, it should just be repealed as it serves no independent purpose.
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