Weaponized U5 Allegation

A long-tenured advisor, who had been with the firm for nearly 15 years, was terminated in November 2020. The firm subsequently filed a Form U5 that published serious, damaging allegations to BrokerCheck: impersonating a client via telephone. The advisor retained AdvisorLaw to seek expungement through FINRA arbitration to restore her perfect public record.

The incident stemmed from the advisor's efforts to assist the 82-year-old wife of a deceased, longtime client. The client, who was under severe emotional stress and had a significant speech impediment, requested the advisor contact an annuity company and represent herself as the client to access information about annuities purchased a decade earlier. The advisor complied in her best effort to help.

• Two weeks after the incident, the advisory team provided a full written explanation and a letter from the client to the annuity company. The annuity company replied, stating it would not be taking any action.
• Despite this resolution, a member of the advisory team learned the advisor's employment was in jeopardy.
• In early November 2020, the advisor informed the firm of her intent to resign the following day.
• The firm swiftly terminated her employment that very next day, filing a Form U5 alleging discharge for impersonating a client.

At the FINRA Dispute Resolution hearing, the Arbitrator reviewed:

• Testimony from the advisor and arguments from AdvisorLaw.
• The client's letter and the annuity company’s letter stating no action would be taken.
• The firm’s internal communications and the advisor’s records.

The Arbitrator concluded that the allegations on the advisor’s record were of a "defamatory nature" and recommended expungement.

Outcome: Soon, our advisor will be back to having disclosure-free CRD and BrokerCheck records, her professional reputation fully restored.

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