A report released on Wednesday by an association of lawyers who represent aggrieved investors suggests that Wall Street brokers were almost always successful when they asked to have black marks erased from their records after settling a dispute with a customer.
The Financial Industry Regulatory Authority, the private corporation that is the brokerage industry's self-financed policing arm, has long provided a public database, known as BrokerCheck, to expose some of the bad behaviors of Wall Street. Investors often rely on the organization's database as a repository of red flags.
In recent years, however, more and more brokers have been seeking to wipe their slates clean by seeking "expungements," or the deletion of negative records or other problems.
Brokers who asked arbitrators to recommend expungement got approval in 96.9 percent of cases that were settled from May 18, 2009 to Dec. 31, 2011, the lawyers' group, the Public Investors Arbitration Bar Association, said in the report.
Such requests are most frequently made after a customer and a broker or firm have reached a settlement before a hearing occurs.
Finra has said that expungement is supposed to be an "extraordinary" remedy, but the report shows that such grants are made routinely.