Business Law Prof Blog: Dead Investors Tell No Tales – Expunging Information After a Customer Passes

Professor Benjamin P. Edwards, on his Business Law Prof Blog, writes about stockbrokers expunging negative information. His post begins as follows:

I’ve written about the expungement process stockbrokers now use to suppress public information before.   We know that brokers who receive expungements are statistically more likely to cause harm than the average broker–about 3.3 times as likely to cause harm.  We also know that customers usually don’t get much notice before an expungement hearing will held.  We also know that brokers have used claims for nominal damages to cut costs and ensure that only a single arbitrator will hear the matter.

But I had not yet realized another problem with the system.  Brokers often succeed at expunging information after more than six years have passed.  Generally, a broker should not be able to secure an arbitration award recommending expungement after more than six years from the occurrence or event giving rise to the claim has passed.  I suppose some arbitrators might buy an argument that the presence of the information in the public record creates a type of continuing harm and that the claim continues to arise.  It’s a bit like arguing that a scar from a twenty-year old injury means you should be able to sue about it because seeing the scar continues to harm you.  Of course, many brokerage firm defendants simply don’t care whether a former broker secures an expungement or not and will not even raise the issue with an arbitrator.

To see full post, click: Business Law Prof Blog

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal..

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