FINRA Form U5 Expungement Award:

Florida Advisor Removes Termination And Internal Review Disclosures From Records


FINRA Form U5 Expungement Award:

Florida Advisor Removes Termination And Internal Review Disclosures From Records


 

*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: December 2, 2022
Hearing Site: Boca Raton, Florida
Respondent Firm: Lord Abbett Distributor LLC
Claimant Representative: Zack Morse, J.D.


Case Objective:

An advisor in Florida had a termination disclosure on his CRD, IARD, BrokerCheck, and IAPD profiles, as well as an accompanying internal review disclosure on his CRD and IARD records. He had been living with the marks since early 2016 and decided it was time to take action — so he hired HLBS Law to bring him through FINRA Arbitration.


Case Summary:

In 2003, our advisor joined the firm. Meanwhile, his brother was a financial advisor with Merrill Lynch (ML). Our advisor held accounts in ML’s personal advisory program. While the accounts were nondiscretionary, our advisor had no involvement in selecting the securities in the ML accounts. In the interest of transparency and remaining compliant, our advisor informed his firm’s compliance department not only about the ML accounts’ existence, but of all details of the strategy that was utilized within the accounts, including the fact that IPOs were purchased within the accounts. He affirmed that he had no involvement with security selection and that he wouldn’t influence any trading in the accounts. Compliance reviewed the strategy and approved its execution.



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The advisor’s brother contacted our advisor’s firm annually to discuss any issues concerning our advisor’s ML accounts. The brother also sent an annual letter to our advisor’s compliance department, reminding it of the fact that our advisor was using the strategy in nondiscretionary accounts. The firm received regular statements reflecting the securities purchased in the accounts, as well. Compliance repeatedly reviewed and approved the strategy and the securities purchased in our advisor’s ML accounts. Then, around early 2016, the compliance department again reviewed the strategy and investments and suddenly determined that our advisor had not provided the required disclosure paperwork, despite the multiple letters that his brother had sent to Compliance regarding the strategy.

Our advisor immediately informed the firm that he was resigning, yet the firm still published a Form U5 reporting an employment separation after allegations that the advisor had allegedly purchased IPOs in personal accounts.


Result:

The FINRA Dispute Resolution Arbitrator reviewed the documents submitted. She listened to testimony from the advisor himself, as well as the arguments presented by Zack Morse, J.D. The firm submitted an answer denying any wrongdoing and asserting various defenses, yet it did not oppose the advisor being granted expungement.

After hearing the details behind the termination and the events that allegedly led up to it, the Arbitrator recommended expungement — not only of the termination disclosure, but of the internal review disclosure, as well.

In one fell swoop, this advisor wiped two occurrences, including a public termination disclosure, from his public and industry records, thanks to Zack Morse, J.D. 




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