Court denies expungement of broker’s record where FINRA arbitration was “unfair.”

A brokerage firm petitioned to confirm a FINRA arbitration award recommending the expungement of a client’s allegation of misconduct from the record of one of its brokers. The client opposed the petition, arguing that the FINRA arbitrators did not provide her a fair hearing at the arbitration during which the broker’s expungement was considered. FINRA also petitioned to vacate the award recommending expungement for similar reasons as the client. Ultimately, the court refused to confirm the expungement and vacated the award, finding that the arbitrators had not provided a full and fair hearing to the client. In particular, the court found that the arbitrators prevented the client from offering oral evidence at the expungement hearing, even though the firm was given the opportunity to do so, and the arbitrators also did not allow the client to question the broker, who appeared and acted as a witness on her own behalf. The court decided that the arbitrators’ refusal to hear the client’s evidence and cross-examination deprived the client of a fair hearing and substantially prejudiced her rights.

_{Case Law Alerts, 4^th Quarter, October 2016. Case Law Alerts is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2016 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.}