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Award Date: July 12, 2024
Claimant Representatives: Dochtor Kennedy, J.D., MBA, and Harris Freedman, J.D.
Respondent Firm: World Choice Securities, Inc.
Case Objective:
About 25 years into his career, this Texas-based advisor and CCO had one termination disclosure on his records from 2017. He chose to seek expungement of the disclosure with the help of AdvisorLaw.
Summary:
When the advisor joined the firm in the fall of 2012, he disclosed that he was engaged in an outside business activity (OBA), as he owned an online stock-trading school and resource that did not provide any investment recommendations to its students. The firm approved the OBA.
Four years later, in mid-2016, the firm’s chief compliance officer (CCO) contacted the advisor regarding a certain form that he had submitted when he joined the firm in 2012. The advisor had used the form in his marketing materials for his OBA, before joining the firm. Though he had not used the form while registered with the firm, the advisor sought approval from compliance to use the form in his marketing materials. Compliance denied approval and issued a written reprimand to the advisor for using the form — even though he had not even done so while registered with the firm.
The advisor discussed the form and other compliance issues with the CCO on several occasions. Despite his efforts, the CCO notified the advisor that he was being terminated for alleged misuse of “broker-dealer-only” content in a public forum. Unaware of any such use on his part, the advisor sent an email to the CCO, requesting clarification for the reasoning behind his termination. The CCO informed the advisor that she had concerns regarding a post that he had made to his Facebook business page, which included a common financial industry newsletter clipping that he had cited. Though the newsletter was publicly available, the CCO stated that she had not authorized its publication, and she erroneously believed that it had originated with the firm.
A termination disclosure was reported to the advisor’s CRD and BrokerCheck records, citing an alleged violation of the firm’s written policy and procedures for advertising, in that he had allegedly used information that was for broker-dealer use only on social media.
Resolution:
At the advisor’s FINRA Dispute Resolution hearing, the FINRA Arbitrator reviewed all pleadings and documents submitted by the advisor and the firm. He listened to the advisor’s testimony, and Dochtor Kennedy, J.D., MBA, and Harris Freedman, J.D. presented their arguments on behalf of the advisor’s request for expungement.
The Arbitrator concluded that the information published in the disclosure was defamatory. He recommended expungement of the reason for termination and termination explanation from the advisor’s Form U5 and directed that the reason for termination be changed to “voluntary” and that the termination explanation be deleted in its entirety and appear blank. The Arbitrator stated that his directive shall apply to all references to the reason for termination and termination explanation.
With the misleading and defamatory-in-nature allegations against him soon to be wiped from his records, this advisor may move forward, free of any reference to the unwarranted termination.