FINRA U5 Expungement Award:
LA-Based Advisor Expunges Termination Disclosure From 2013 — Clearing His Records
FINRA U5 Expungement Award:
LA-Based Advisor Expunges Form U5 Termination Disclosure From 2013 — Clearing His Records
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A Los Angeles-based advisor with over 20 years in the industry sought expungement of the one mark on his public record — a termination disclosure from nearly a decade earlier. The advisor hired AdvisorLaw to guide him through FINRA’s expungement process.
In July of 2011, the advisor joined the firm as a personal banker. Over the course of about two weeks, the advisor was trained on firm’s policy for opening checking and savings accounts. At that time, the policy did not require the client to be physically present in order to open an account.
In October of 2012, the advisor became a registered financial services representative with the firm. In early 2013, the firm changed its policy for opening checking and savings accounts, to require that clients be physically present.
Around mid-2013, an assistant manager was overseeing the advisor’s branch while his branch manager was on vacation. Our advisor assisted the assistant manager with opening two accounts for a client who had completed a paper application. Briefly forgetting about the updated policy for opening accounts, the advisor transferred the information from the client’s application to the firm’s account-opening platform, thereby opening accounts for the client pursuant to the firm’s old policy.
Within five minutes, the advisor realized that he had made a mistake and brought it to the attention of the assistant manager. He suggested closing the accounts immediately, as all accounts could be closed within the first 24 hours of opening. The assistant manager told the advisor that she would handle the matter and not to give it further concern.
While the client did not complain, and the accounts were properly opened by the advisor within one week, our advisor was soon terminated and hit with allegations that he had allegedly violated firm policy by opening accounts for a client who was not physically present.
At the FINRA Dispute Resolution hearing, the Arbitrator reviewed the exhibits and listened to testimony by the advisor, as well as arguments from Samantha Pastor, J.D. and Dochtor Kennedy, MBA, J.D. She considered the fact that the firm denied the majority of the advisor’s allegations and asserted various defenses in opposition of his request for expungement, as well as the firm’s assertion that the advisor’s claim was ineligible for arbitration under Rule 13206. Ultimately, the Arbitrator determined that the disclosure was defamatory in nature and recommended its expungement, along with that of all references to the occurrence in the CRD. Finally, she directed that the reason for termination on the advisor’s records be changed from “discharged” to “voluntary.”
This advisor will soon have disclosure-free records after nearly a decade of living with a disclosure that resulted from an honest mistake.
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