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Award Date: July 18, 2025
Claimant Representative: Peter Lindholm, Esq., HLBS Law
Respondent Firm: UBS Financial Services Inc.
Key Takeaways:
- Successful U5 Expungement: A California financial advisor successfully expunged a false termination disclosure from his Form U5, CRD, and BrokerCheck records.
- Defamatory Disclosure: The FINRA Arbitrator found the U5 disclosure from UBS Financial Services Inc. to be defamatory, misleading, and not supported by evidence.
- Restored Reputation: The expungement decision officially changed the advisor's termination reason to "Voluntary," restoring his clean professional record.
- Legal Representation: The case was led by Peter Lindholm, Esq., of HLBS Law, who presented evidence to prove the disclosure was inaccurate.
- FINRA Dispute Resolution: This case highlights a successful outcome through the FINRA arbitration process, demonstrating how advisors can challenge and remove inaccurate or misleading information from their public records.
Case Objective:
In July 2021, a San Francisco-based investment advisor and former broker faced a negative termination disclosure on his Central Registration Depository (CRD) and public BrokerCheck® records. The disclosure, filed by UBS Financial Services Inc. on the adviser’s Form U5, inaccurately stated that the FA was "discharged" for violating firm policy by facilitating a loan between two clients and providing unsatisfactory responses during the firm's investigation. This misleading entry damaged the adviser’s reputation and professional opportunities. With the assistance of HLBS Law, the FA pursued expungement through FINRA Dispute Resolution to clear his record.
Summary:
The adviser was employed by UBS between April 2011 and May 2016. In January 2013, the adviser introduced two of his clients to each other, and they ended up entering into a private $170,550 loan agreement for a real estate transaction. The adviser did not recommend, negotiate, or earn commissions from the loan, which was not part of the clients’ investment accounts managed by UBS.
In April 2016, one client failed to repay the loan, prompting the other to file a claim against her. The latter client later alleged, incorrectly, that the adviser had recommended the loan as an investment, leading to a FINRA inquiry and, ultimately, the adviser’s termination. A related customer claim filed in 2017 was denied in its entirety in 2018 and again in 2020.
The Form U5 filed by UBS in July 2021 alleged that the adviser had violated firm policy and was discharged. The adviser contested this characterization, asserting that it was defamatory and misleading, as he had had no involvement with the loan’s creation and had provided honest responses during UBS’s investigation.
Resolution:
The adviser’s statement of claim sought expungement under FINRA Rule 8312(g)(1), arguing that the Form U5 disclosure was defamatory-in-nature and tended to mislead. The expungement hearing was conducted via videoconference on July 8, 2025. Peter Lindholm, Esq. presented evidence, including the adviser’s testimony and documentation confirming the private nature of the loan transaction. UBS did not oppose the expungement request and did not participate further in the case.
The FINRA Arbitrator reviewed the pleadings, testimony, and evidence. He found the Form U5 disclosure defamatory in nature, as the adviser had not facilitated the loan or provided unsatisfactory responses during the UBS investigation. The allegations were deemed misleading, implying unethical conduct that was not investment-related and did not warrant termination.
On July 18, 2025, the Arbitrator ordered expungement of all references to the occurrence from the adviser’s CRD and BrokerCheck® records. The reason for termination on the Form U5 was amended to "Voluntary," the termination explanation was deleted, and related disclosures, including the "Yes" response to question 7F(1) and termination disclosure reporting pages, were removed.
The Arbitrator’s decision restores the adviser’s professional record, affirming his ethical conduct and removing barriers to future employment and client relationships.
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