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Expungement Award Date: June 7, 2021
FINRA Hearing Site: Dallas, Texas
FINRA Claimant Representative: Erika Binnix, J.D. & Dochtor Kennedy, MBA, JD
Case Objective
A near-25-year financial services veteran from Texas sought expungement of a Form U5 termination disclosure that arose due to the global COVID-19 pandemic. Effects of the pandemic that were out of the advisor’s control had prevented him from meeting the position’s requirements, which had been put in place before the COVID outbreak. The advisor was terminated only six months into his tenure with the firm.
Case Summary
In January 2020, the firm hired an advisor to acquire new business in a newly acquired territory. The firm told the advisor that he was hired primarily because of his existing relationships in the area. To ensure that the advisor could attend the following week’s national sales meeting, the firm reduced the advisor’s training from its usual five-day program to a three-day one. As a result, the advisor was insufficiently trained in the firm’s CRM software.
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Beginning in mid-March 2020, the Covid-19 pandemic and non-essential business shutdowns began to take effect. As a result, the advisor was unable to meet with his prospects in person. The volatile markets consumed the time and energy of those in the industry and made it difficult for the advisor to get time on the phone with his prospects. Many began to complain about the multiple voicemails and emails that they received daily from wholesalers such as our advisor. While the advisor fulfilled his daily contact obligations, his abbreviated training in the firm’s CRM software resulted in erroneous entries that inaccurately reduced his production ranking among colleagues. Even though the firm was well aware of the unrealistic nature of its expectation that its reps meet their pre-COVID production requirements, the firm was unsympathetic, and it terminated the advisor.
Result
After considering the testimony and evidence submitted in the arbitration, the FINRA Arbitrator recommended that the Reason for Termination on the advisor’s Form U5 be changed to “Voluntary” and that the Termination Explanation be deleted in its entirety. The Arbitrator based the decision on the defamatory nature of the information contained in the disclosure. The advisor can now move forward without the blemish of a termination disclosure on his CRD and BrokerCheck records.
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