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Award Date: June 13, 2022
Hearing Site: Detroit, Michigan
Respondent Firm: Securities Service Network, LLC
Claimant Representative: Erika Binnix, J.D.
Case Objective:
An advisor in Michigan who has been in the industry for nearly 25 years had a ten-year-old Form U5 termination disclosure from FINRA with vague allegations pertaining to the advisor being the subject of a FINRA investigation. The advisor sought the help of AdvisorLaw in seeking expungement through FINRA’s Dispute Resolution.
Case Summary:
In 2009, our advisor and a partner owned a financial planning firm together. The partner was also the general manager for QA3 Financial Corp., a now-defunct firm where both men were registered at the time. Our advisor and the partner personally invested in a promissory note with QA3’s verbal permission, and they complied with firm and FINRA guidelines by refraining from recommending the note investment to any clients.
However, after QA3 went out of business, and our advisor and his partner joined Securities Service Network, LLC (SSN), FINRA and SSN conducted an audit of the advisor and his partner’s activity involving the note. When the partner was questioned by the FINRA and SSN investigators, he became evasive and abusive, threatening one of the investigators. Due to the partner’s behavior, SSN terminated both men’s employment.
Our advisor ended his association with the partner and was subsequently rehired by SSN, under heightened supervision and subject to additional fees. Despite the fact that he had been permitted to re-register with the firm, the termination disclosure sat on his public record for nearly a decade.
Result:
SNN did not appear at the FINRA hearing on the matter and did not oppose the advisor’s request for expungement. The Arbitrator listened to the advisor’s testimony and compelling arguments by Erika Binnix, J.D., and she reviewed the other materials submitted at the hearing. The Arbitrator found that the termination disclosure on our advisor’s records was defamatory-in-nature, and she recommended its expungement.
Our advisor will soon have a public record that reflects no past terminations after allegations.
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