FINRA Expungement Awarded: Advisor Clears Name After Goldman Sachs Termination

Award Date: June 21, 2024
Claimant Representative: Chelsea Bauer, J.D., HLBS Law
Respondent Firm: Goldman Sachs & Co. LLC

Case Objective:

This Florida-based investment adviser and former broker has been in the industry for nearly 35 years. His CRD, IARD, IAPD, and BrokerCheck records reflected his decades of excellent service in the industry, with the glaring exception of a termination disclosure from 2021. The adviser hired HLBS Law to help him seek expungement of the disclosure through FINRA Dispute Resolution.

Summary:

In 2020, an existing client of the adviser expressed his desire to purchase equities with more risk. However, he elected not to execute certain transactions until 2021, due to the then-current political climate. 

In January 2021, a short squeeze on GameStop and other securities, including BlackBerry, which later became known as the “Reddit Craze,” caused stock prices to surge. 

In late January, the client sent the adviser a list of five individual stocks that he wanted to purchase on an unsolicited basis, including BlackBerry. The purchases would require liquidations of some of the client’s ETFs. The adviser explained that issues with the settlement times of certain liquidations could cause some delays in purchases. The client’s ETF sales did end up being delayed, and the adviser remained in contact with the client and with his own staff, calling frequently for updates. 

In late January, the adviser decided to purchase BlackBerry stocks in his personal account. The following day, the client’s trade request for BlackBerry stock was executed. Due to the ETF-related delays in the client’s account, he ended up paying a higher price per share for BlackBerry than the adviser did in his personal account. 

Later that day, Robinhood halted purchases of GameStop and other securities. Soon thereafter, Goldman Sachs initiated an internal investigation into the advisor’s purchase of BlackBerry stock. The advisor was then terminated for allegedly placing a trade in his personal account for the same security purchase that the client had requested but that had not yet been executed.

Resolution:

Goldman Sachs opposed the adviser’s expungement request, requesting that his claim be dismissed in its entirety and that all forum fees be assessed against the adviser. The adviser testified as to the events that had transpired leading up to his termination from the firm, and Chelsea Bauer, J.D., HLBS Law, made arguments in favor of expungement on behalf of the adviser. 

After listening to both sides, the Arbitrator decided against Goldman Sachs and in favor of the adviser, stating that “trading ahead occurs when the employee places an order to be executed before the client’s order” and that “That did not occur here[; a] processing error occurred, which resulted in [the adviser’s] trade being processed prior to his client.”

Accordingly, the Arbitrator recommended expungement and stated that it was warranted “based on the defamatory nature of the information.” 

With this termination disclosure soon to disappear from the adviser’s records, he can enter his 35^th year as a financial services professional with a new and improved public BrokerCheck record.

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