Investment Advisor Wins Expungement Of 1997 U5 Termination

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Award Date: January 31, 2023
Hearing Site: St. Louis, Missouri
Respondent Firm: Cardinal Investments, Inc.
Claimant Representative: Doc Kennedy, J.D., MBA

Case Objective:

In the late 1990s, about ten years into his career as a financial services professional, this advisor was terminated from the firm he had joined not two years prior. After the termination disclosure sat on his CRD and IAPD records for 25 years, the advisor decided it was time to seek expungement, and he hired AdvisorLaw to bring him through FINRA’s Dispute Resolution forum.

Case Summary:

The advisor joined the firm in 1995, and he worked with a partner who was also in his Office of Supervisory Jurisdiction (OSJ). The pair worked together, wholesaling various fixed and variable annuity products. They fully disclosed the wholesaling activity to the firm as an outside business activity (OBA), and the firm approved it.

One of the clients of the wholesaling business assisted the advisors with various marketing campaigns and seminars. The advisors and the client agreed to share the cost of the seminars, as well as any commissions received in connection with any associated annuity sales. Our advisor applied for and acquired permission from the firm to engage in the activity. However, unbeknownst to our advisor, the client (who was also an advisor with another firm) did not acquire the requisite permission from his own firm.

Our advisor and the client split commissions for at least one fixed-income annuity. They did not split any commissions related to any securities. Then, in October of 1997, our advisor received a letter from his firm, notifying him that he was being terminated immediately, for allegedly sharing commissions with a registered rep with another broker-dealer.


The firm responded to the advisor’s Statement of Claim for FINRA arbitration, opposing his expungement request and asserting its opinion that the advisor was not entitled to relief in any form. The firm even went so far as to file a Motion to Strike. Through AdvisorLaw’s Dochtor Kennedy, J.D., MBA counsel, our advisor filed a response to that motion, and the Arbitrator denied it.

At the hearing on the matter, the arbitrator considered the pleadings and submissions, the evidence presented, the advisor’s testimony, and the arguments presented by and Dochtor Kennedy, J.D., MBA.

The Arbitrator found that the disclosure met the standards for expungement, and he recommended the expungement of the Reason for Termination and Termination Explanation on the advisor’s U5 filed by the respondent firm. He ordered that the Reason for Termination is changed to Voluntary and that the Termination Explanation “be deleted in its entirety and shall appear blank,” in addition to that directive applying to “all references to the Reason for Termination and Termination Explanation.” The Arbitrator further recommended the expungement of all references to the occurrence from the registration records maintained by the CRD and that any “Yes” answers be changed to “No,” as applicable.

For the first time in more than 25 years, this advisor can boast a record free of any mention of the meritless allegations surrounding his 1997 termination.

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Expungement Award