The U.S. Securities and Exchange Commission has approved a new brokerage industry rule to ban dispute settlements between securities firms and investors that require investors to agree to erase complaints from brokers' public records.

In addition, the SEC recommended that the Financial Industry Regulatory Authority conduct a "comprehensive review" of other procedures that can enable brokers and firms to erase, or "expunge," certain details from their public records, it wrote in an order posted on its website on Wednesday.

The agency is concerned by how frequently the Wall Street industry-funded watchdog's arbitrators grant brokers' requests to erase details of customer complaints from their records, not just under settlement agreements with investors.

FINRA, Wall Street's industry-funded watchdog, filed its plan to ban the expungement-related settlement pacts with the SEC in April.

The move followed a study by the Public Investors Arbitration Bar Association, a group of securities arbitration lawyers, that found brokers succeeded 96.9 percent of the time between mid-2009 and the end of 2011 in expunging details about cases brought by investors against their firms that were later settled.

Investors who claim to have lost money because of a broker's misconduct or advice often file a case against the broker's firm in FINRA's securities arbitration forum. Details of the complaint then appear in the broker's publicly available disclosure report in a free database for investors known as BrokerCheck.

Brokers who want to erase those details typically file their own FINRA arbitration cases, asking for a recommendation to expunge the records. Brokers who are successful must then obtain a court order to complete the process. FINRA can oppose the court application.

PIABA has alleged that brokerages strong-arm investors into waiving their rights to oppose expungements, but lawyers for brokerages have disputed the point.

The new rule "should help assure that accurate and complete customer dispute information remains available to the investing public, regulators and broker-dealers," the SEC wrote.

The completeness of that information "is critical for the protection of investors and effective regulatory oversight," it wrote.

Brokers can also rely on other FINRA rules and procedures to request expungement, independent of a dispute or settlements with investors.

The SEC noted its concern about a "high number of cases" in which FINRA arbitrators granted requests to expunge brokers' records. It encouraged FINRA to assess whether changes are needed to ensure that expungement is permitted only where the information in question "has no meaningful investor protection or regulatory value."

A FINRA spokeswoman said the regulator shares the SEC's concerns and will "continue to consider additional rulemaking as appropriate."