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FINRA Panel Expunges Unauthorized-Trading Claim For Illinois Financial Advisor
Aug. 27, 2026
FINRA Panel Expunges Erroneous Unsuitability Claim For Veteran Michigan Financial Advisor
Quick Summary
A three-arbitrator FINRA Panel granted expungement of an unauthorized-trading complaint from the CRD and BrokerCheck records of an Illinois advisor with more than 20 years in the industry. The complaint alleged a stock position was sold without the customer’s approval. The sale was made by a third-party money manager the customer had hired, and the advisor had no involvement and no authority to direct trades. The Panel found the claim factually impossible or clearly erroneous, that he was not involved in the alleged violation, and that the claim was false.
Key Facts
- Outcome: expungement granted under FINRA Rule 2080, August 31, 2026
Allegation: unauthorized trading (a stock position sold without the customer’s knowledge or approval) - Respondent firm: Cambridge Investment Research, Inc., which denied the claim in 2024 and took no position on expungement
- Timeline: complaint reported April 8, 2024; expungement filed September 30, 2025; hearing August 25, 2026; award August 31, 2026 (about 11 months from filing to award)
- The customer did not pursue the matter in arbitration or court, and no customer representative appeared at the hearing
- Representation: Alex Padla, Esq. and Jennifer Cox, Esq.
What the customer alleged
On April 8, 2024, a customer dispute was reported to the advisor’s CRD and BrokerCheck records alleging that a stock position was sold without the customer’s knowledge or approval. After investigating, Cambridge denied the claim as without merit on May 2, 2024. The customer did not pursue it in arbitration or court, but the disclosure remained on his registration records for more than two years.
How the third-party manager arrangement worked
The advisor began working with the customer in 2017 and later recommended Howard Capital Management, Inc., a third-party money manager, to manage her accounts. In September 2020, the customer completed and signed the documents employing Howard, including Cambridge’s new account form, Howard’s application, and an E*TRADE account application. The advisor explained that Howard would manage the portfolio and that he would not.
On September 10, 2020, when the customer’s IRA transferred to Cambridge, Howard liquidated her shares of Amazon.com, Inc. The advisor had no involvement in that sale and no authority to direct specific transactions in the account. The customer later mistakenly believed Cambridge had sold the stock without her consent. The advisor reminded her that she had authorized Howard to make trading decisions. By May 2023, she was no longer his client.
What the Panel found
The three-arbitrator Panel held a recorded videoconference hearing on August 25, 2026. Relying on the advisor’s testimony and the account-opening documents the customer had signed with the third-party manager, it granted expungement under FINRA Rule 2080. The Panel found the claim was factually impossible or clearly erroneous, that the advisor was not involved in the alleged violation, and that the claim was false. It wrote that “at no time did Claimant have authority to direct specific transactions involving the Customer’s investment account.”
What Advisors Can Take From This
When a third-party money manager makes trading decisions, the account-opening and manager agreements are the record of who was authorized to do what. Here, those documents and the advisor’s testimony were what the Panel relied on. Advisors who use third-party managers should confirm those agreements are complete, signed, and easy to retrieve.
Frequently Asked Questions
Can an unauthorized-trading claim be expunged from BrokerCheck?
In some cases. Under FINRA Rule 2080, a panel can grant expungement if it finds a claim is factually impossible or clearly erroneous, the advisor was not involved, or the claim is false. Results depend on the facts of each case.
How long did the expungement take?
In this case, the Panel relied on the advisor’s testimony and the account-opening documents the customer signed with the manager, and found the advisor was not involved. Outcomes vary with the facts.
Does it matter if a third-party money manager made the trade?
In this case, about 11 months from filing (September 30, 2025) to award (August 31, 2026). Timelines vary.
Results depend on the facts of each case and are not a guarantee of a similar outcome. An arbitration award granting expungement generally must be confirmed by a court before FINRA removes the information from the CRD system.
Is an Unauthorized-Trading Claim on Your Record?
If a customer complaint is still showing on your CRD or BrokerCheck record, it may be worth finding out whether expungement is an option, even when the complaint was denied or never pursued. Every case is different, and results can’t be guaranteed.