FINRA Form U5 Expungement Award:

Maine Advisor Achieves Expungement Of Firm-Opposed Termination Disclosure

 

FINRA Form U5 Expungement Award:

Maine Advisor Achieves Expungement Of Firm-Opposed Termination Disclosure


 

*If you're under FINRA or SEC investigation, or if you have a meritless disclosure on your BrokerCheck, CRD, IARD, or IAPD record, call us right now at (303) 952-4025, or contact us to talk with an attorney and receive a priority consultation at no charge.


Award Date: August 12, 2022
Hearing Site: Augusta, Maine
Respondent Firm: Commonwealth Financial Network
Claimant Representative: Doc Kennedy, MBA, J.D., and Harris Freedman, J.D.


Case Objective:

An advisor in Maine who began his financial-services career nearly 20 years ago was terminated in 2019 — after nearly a decade with the firm. The advisor hired AdvisorLaw to take his one shot at achieving expungement of the disclosure through FINRA Dispute Resolution.


Case Summary:

Our advisor joined the firm in January of 2010 and worked for more than eight years with no compliance or disciplinary issues. Around 2017, Great-West Retirement Services offered an income rider for its annuities that substantially increased the contract-holders’ annual income, at a lower cost. Our advisor reviewed his customers’ investor profiles and recommended annuity exchanges when appropriate, to best serve the customers’ interests. Because the advisor had so many customers who could benefit from those exchanges, he experienced a spike in annuity-exchange business around that time.

During a routine audit in 2018, the firm’s compliance department questioned the advisor about the increased number of annuity exchanges by the advisor’s clients the previous year. The advisor explained the reasoning and was told that his response was satisfactory from a compliance standpoint.



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In the summer of 2019, our advisor began looking for other opportunities and determined that another firm would be best suited for his business practices.

In September of 2019, the firm’s compliance department informed our advisor that he would not be allowed to exchange, replace, or liquidate any variable annuities on behalf of his customers through the firm, moving forward. Additionally, that policy would apply only to our advisor and not to other representatives with the firm. The advisor complied with the firm’s directive.

Subsequently, a customer who had liquidated an annuity and deposited the funds into her personal account several months earlier decided to invest a portion of those funds into a new variable annuity. As that customer had already taken possession of the funds from the original annuity, the purchase of the new annuity did not constitute an exchange or replacement. Our advisor understood that the firm approved the customer’s new annuity purchase.

However, our advisor was soon notified that he was being terminated, effective immediately. He was given no reason for the termination, and the firm simply published allegations indicating that the advisor’s business practices were not aligned with those of the firm.


Result:

Upon receiving the advisor’s Statement of Claim for FINRA arbitration, the firm submitted an answer denying the allegations and asserting various defenses. The firm even requested that the Statement of Claim be dismissed in its entirety and that all fees be assessed to the advisor.

The Arbitrator read the documents and evidence submitted at the FINRA Dispute Resolution hearing, and she listened to the advisor’s testimony, as well as arguments presented by Dochtor Kennedy, MBA, J.D. and Harris Freedman, J.D. Upon consideration, the Arbitrator determined that expungement was appropriate, based on the defamatory nature of the information contained in the disclosure.

With that being the only disclosure on our advisor’s public BrokerCheck record, our advisor will soon have a completely clean record to boast as he moves forward with his career.



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