Deleting Misconduct: The Expungement of BrokerCheck Records

@article{Honigsberg2019DeletingMT,
  title={Deleting Misconduct: The Expungement of BrokerCheck Records},
  author={Colleen Honigsberg and Matthew Jacob},
  journal={Regulation of Financial Institutions eJournal},
  year={2019}
}
Abstract We examine a controversial process, known as expungement, which allows brokers to remove evidence of financial misconduct from public records. From 2007 to 2016, we identify 6,660 expungement requests, suggesting that brokers attempt to expunge 12% of the allegations of misconduct reported by customers and firms. When these requests are adjudicated on the merits, arbitrators approve expungement 84% of the time. We show that expungements significantly predict future misconduct; brokers… 

Auditors are Known by the Companies They Keep

Abstract We study the role of reputation in auditor-client matching. Using 1.2 million employment records from US broker-dealers, we find that broker-dealer clients of the same auditor have similar

Customer Disputes, Misconduct, and Reputation Building in the Market for Financial Advice

We analyze the impact of records of denied and withdrawn customer complaints on job separation in a dataset based on FINRA’s Broker-Check database with more than 1 mio. financial advisers. Compared

Financial Gatekeepers and Investor Protection: Evidence from Criminal Background Checks

We examine whether financial advisors with pre‐advisor criminal records pose a greater risk to investors than those without. We find that financial advisors with pre‐advisor criminal records are more

Arbitration with Uninformed Consumers

We examine whether firms have an informational advantage in selecting arbitrators in consumer arbitration, and the impact of the arbitrator selection process on outcomes. We collect a novel data set

The Selection of Claims in Securities Arbitration for Settlement: A Text-Based Analysis

This paper develops text-based measures of case strength and similarity using Statements of Claims filed in securities arbitration concerning investments in Puerto Rico municipal bonds to predict

Do CFP® professionals engage in less misconduct? Exploring the importance of job classification when comparing misconduct rates among financial service professionals

ABSTRACT Using a unique dataset of FINRA-licenced individuals in Florida in 2015 that was enriched to include job classification information generally not contained in publicly-available regulatory

NBER WORKING PAPER SERIES ARBITRATION WITH UNINFORMED CONSUMERS

This paper studies the impact of the arbitrator selection process on consumer outcomes. Using data from consumer arbitration cases in the securities industry over the past two decades, where we

Criminals, Bankruptcy, and Cost of Debt

We examine whether criminal records of CEOs and rank-and-file employees are associated with firms’ likelihood of bankruptcy, and whether lenders adjust their required cost of debt accordingly. We use

Should gains from criminal knowledge be forfeited?

Nobody should profit from crime; this fundamental moral principle is uncontroversial. At the level of public declaration, few people are likely to disagree with this statement; however, controversies

References

SHOWING 1-10 OF 76 REFERENCES

Auditors are Known by the Companies They Keep

Abstract We study the role of reputation in auditor-client matching. Using 1.2 million employment records from US broker-dealers, we find that broker-dealer clients of the same auditor have similar

How Widespread and Predictable Is Stock Broker Misconduct?

We reconcile widely diverging recent estimates of broker misconduct. Qureshi and Sokobin [2015] reported that 1.3% of a sample of current and former brokers was associated with awards or settlements

Expungement of Customer Complaint CRD Information Following Settlement of a FINRA Arbitration

The Financial Industry Regulatory Association (“FINRA”) maintains a database of customer complaints about individuals licensed by FINRA as registered representatives. The data can be accessed and

Attorneys as Arbitrators

We study the role of attorneys as arbitrators in securities arbitration. We find that arbitrators who also represent brokerage firms or brokers in other arbitrations award significantly less

The Market for Financial Adviser Misconduct

We document the economywide extent of misconduct among financial advisers and the associated labor market consequences. Seven percent of advisers have misconduct records, and this share reaches more

The Consequences to Managers for Financial Misrepresentation

We track the fortunes of all 2,206 individuals identified as responsible parties for all 788 Securities and Exchange Commission (SEC) and Department of Justice (DOJ) enforcement actions for financial

Do Investors Have Valuable Information About Brokers?

We examine the value of information available to investors through BrokerCheck: the most comprehensive source of information about brokers' professional background and regulatory history that helps

The Influence of Arbitrator Background and Representation on Arbitration Outcomes

We study the role of arbitrator background in securities arbitration. We find that arbitrator background is correlated with arbitration outcomes. Specifically, industry experience, prior experience

Debt Collection and Settlement: Do Borrowers Under-Utilize the Court System?

Debt contract enforcement is crucial for well-functioning credit markets. For consumer debt, courts allow lenders to garnish wages or foreclose property on severely delinquent borrowers. However,

Securities Fraud, Recidivism, and Deterrence

Legal scholars have expended considerable energy on the study of high-level securities fraud violators -- Ken Lay, Bernie Ebbers, Dennis Kozlowski, etc. There has been little attention, however, to
...