Advisor Achieves Expungement Of Settled Customer Dispute

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Award Date: November 11, 2021
Hearing Site: Boston, Massachusetts
Respondent Firm: J.P. Morgan Securities, LLC
Claimant Representative: Dochtor Kennedy, MBA, J.D.

Case Objective:

A Boston-based, veteran advisor who has been in the industry for more than 45 years had had one customer dispute on his record since the early 1990s. Ready to clear his record, he hired AdvisorLaw to seek expungement of the disclosure from his CRD and BrokerCheck profiles through FINRA arbitration.

Case Summary:

In the early 1990s, the advisor sat on a company’s board of directors. An individual contacted the advisor on two occasions, seeking information about the company. On both occasions, the advisor responded that he was unable to answer the individual’s questions and ended the call. The individual was never a client of the advisor, the advisor never made any recommendations to the individual, and they did not speak outside of those two phone calls.

After the time when the calls took place, the company’s stock price declined. The individual and his co-complainants apparently owned stock in the company and sold it for a loss. Subsequently, the stock price rose significantly. The individual and two co-complainants sent the firm a Statement of Claim which they intended to file with the New York Stock Exchange. They claimed that the advisor had represented to them that he was in possession of non-public information about the company and that he had urged them to purchase its stock. Based on a claim of lost investment opportunity, the complainants sought damages of $45,000.To avoid arbitration, the firm settled with the complainants for one-third of the damages sought, and the advisor had to pay the entire settlement – despite his complete lack of involvement with the individuals, as well as the absurdity of their claims.


While the facts underlying the dispute might have made it a good candidate for expungement, the fact that the claim had been reported nearly three decades earlier meant that the advisor faced the potential obstacle of FINRA’s Rule 13206, which places time limits on claims’ eligibility for expungement. The Rule states that claims are ineligible when “six years have elapsed from the occurrence or event giving rise to the claim” and that “any questions regarding the eligibility of a claim under this rule” would be left to the Panel. Another obstacle facing the advisor was the fact that there was no settlement agreement that the Arbitrator could review, due to the time that had elapsed since the settlement occurred.

At the hearing, the Arbitrator noted that the “occurrence or event” giving rise to a claim was never specifically defined by FINRA and that the advisor “maintained that the ‘occurrence or event’ which merited consideration under Rule 13296 was not the date of the accusation from the complainant…but rather the establishment by FINRA of WEB CRD,” which occurred on June 6, 2016 — less than six years prior to the date of the advisor’s claim. The Arbitrator determined that “expungement is timely within the applicable rule” and that, “given the spaciousness of the allegations…justice dictates that his request for expungement be given standing.” Specifically, the Arbitrator stated that he “was not persuaded by [the firm’s] counter-arguments,” as they “do not surmount [the advisor’s] position that this situation is unique and deserving of the consideration that [the advisor] desires.

After hearing the firm’s and advisor’s testimony and the arguments presented at the hearing by Dochtor Kennedy, MBA, J.D., the Arbitrator stated that the “testimony in this matter established that this was a patently false and erroneous claim,” that the advisor had “made no recommendations to the complainant[, and] he never revealed any non-public information (or any public information about [the company] or compromised his status as a broker in any way.” In addition to finding the claim to be false, factually impossible, and clearly erroneous, the Arbitrator found that the advisor was not “involved in any untoward sales practices” at any time and that he had “never served the complainant in any capacity.” The Arbitrator recommended expungement.

With the help of Dochtor Kennedy, MBA, J.D., this veteran advisor now has a spotless record reflective of his decades of integrity in his financial services career.

Contact us to discuss AdvisorLaw’s Disclosure Expungement services. The consultation is complimentary, and our services were created exclusively for financial advisors.

Expungement Award