Advisors pursuing customer dispute expungements before July 31st will pay a fraction of the new cost.
In short, the following provisions of the recently-approved Rule apply to all matters in which expungement of a customer dispute disclosure is requested as a claim or counterclaim:
Here’s a comparison of existing fees with the new, increased fees:
The fee increases ultimately raise the average cost of expungement by approximately $9,200 in total, all of which goes straight into FINRA’s pockets. In matters where both expungement and monetary relief are requested, the new Rule requires that parties are assessed “the greater of” either the fee associated with the monetary claim, or the new minimum fees outlined above.
FINRA’s fees saddle claimants with costs above and beyond that of hiring representation for the expungement process, which currently runs anywhere from $10,000 to $20,000 per customer dispute.
The new Rule also speaks to a deviation away from evenly splitting hearing session fees among the parties and a shift toward assessing hearing session fees against the party requesting expungement.
When will those requesting expungement become subject to the 3,690% increase in forum costs?
Pursuant to Section 19 of the Exchange Act, the SEC has 60 days to consider whether to suspend the rule change or allow it to remain in effect—though, the SEC has never suspended a FINRA rule change. Therefore, AdvisorLaw expects the change to take effect by July 31st.
Allowing a mere 3-4 weeks for due diligence, drafting, and filing the claim requesting expungement relief, those interested in avoiding the higher fees are encouraged to engage before July 4th.
Being that member firms will likely pass along any increased costs to the claimant advisors, the new Rule is anticipated to have a detrimental effect on the viability of expungement claims pursued after the new Rule becomes effective.
A full summary of the proposal can be found here.
If you want to avoid these new fees, you should have your case for expungement filed immediately.
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