Advisor Removes Unwarranted Form U5 Termination Disclosure

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Award Date: February 1, 2022
Hearing Site: Phoenix, Arizona
Respondent Firm: Edward Jones
Claimant Representative: Dochtor Kennedy, MBA, J.D.

Case Objective:

An investment adviser representative in Arizona hired AdvisorLaw to seek FINRA expungement of an unwarranted Form U5 termination disclosure that had been marring his records for nearly five years.

Case Summary:

The advisor joined the firm in 2012 and maintained a perfect compliance record for over five years. In 2016, a regional leader requested that the advisor hire an administrator. Initially, the advisor and administrator worked very well together and became a top-producing team with the firm. However, in late 2016, political and religious differences, in addition to other issues, caused the advisor and administrator’s relationship to become contentious.

In September 2017, after meeting with the advisor on several occasions to process several annuity transfers, a customer failed to include his name and date of birth in one section of a trust form that he had completed. The sponsor company rejected the form due to the missing data. The advisor then requested that the administrator contact the customer and properly obtain the customer’s initials on the trust form. Instead of doing so, the administrator completed the missing data herself, added the customer’s initials next to the newly-completed data, and delivered the forms to the firm for processing.

Shortly thereafter, the advisor suffered a work-related injury. The following day, a compliance team with the firm visited the advisor’s office, unannounced. During that visit, the advisor learned that the administrator had falsely reported to the firm that she had witnessed the advisor correcting the missing data himself and adding the customer’s initials. The advisor truthfully informed compliance that he did not handle such paperwork, nor had he inserted the missing information or initials, and he had not been aware of the administrator’s actions.

The following month, after doctors confirmed that the advisor had experienced a significant concussion from the work-related accident, the advisor filed for an intermittent leave of absence and workmen’s compensation. The firm soon notified the advisor that his employment was terminated for allegedly entering the customer’s initials on the trust form. A publicly-viewable Form U5 termination disclosure was reported to the advisor’s records, alleging that he had inserted the customer’s initials on the form.

Result:

During the FINRA arbitration hearing, the advisor testified, and Dochtor Kennedy, MBA, J.D. argued that the termination disclosure warranted expungement. The Arbitrator found that the advisor “was straightforward and honest in his testimony” and that it was “logical that [the] administrator would process the paperwork involved in [the] matter.” Additionally, the Arbitrator noted that the trust form was ultimately corrected, no client was harmed, the firm did not contest the expungement, and the parties signed an agreement stating that the firm did not engage in wrongdoing or defame the advisor.

The Arbitrator recommended expungement, and the advisor may soon move forward in his career without the burden of a termination disclosure on his records.

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