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Award Date: June 18, 2025
Claimant Representative: Alex Padla, Esq., HLBS Law
Respondent Firm: Resolute Investment Distributors, Inc.
Key Takeaways:
- FINRA granted expungement of a financial advisor's misleading 2024 termination disclosure from his CRD and BrokerCheck records.
- The advisor, a 30-year veteran, was falsely terminated for "underperformance" by Resolute Investment Distributors (RID) despite strong sales metrics.
- The FINRA Arbitrator found the "underperformance" claim misleading and defamatory, ordering full expungement under FINRA Rule 8312(g)(1).
- This case highlights the successful process for financial professionals to remove false U5 termination information and restore their unblemished records through FINRA Dispute Resolution, often with legal counsel like HLBS Law.
Case Objective:
A Connecticut financial advisor successfully secured expungement of a false 2024 termination disclosure related to "underperformance" from his FINRA CRD and BrokerCheck records. FINRA's decision against Resolute Investment Distributors highlights the process for removing misleading U5 information and the importance of engaging legal counsel like HLBS Law to restore a financial professional's reputation through FINRA Dispute Resolution.
Summary:
For over 30 years, the FA maintained an exemplary career in financial services with no disclosures on his public record. From May 2021 to July 2024, he served as a regional sales representative for RID in New England.
Despite ranking in the top half of RID’s territories for gross and net sales in 2024 and achieving top-tier performance in specific funds, the FA was terminated on July 9, 2024.
On July 12, 2024, RID filed a Form U5 stating that the advisor had been discharged” due to “underperformance.” The FA disputed this, highlighting his strong sales metrics and positive feedback from management prior to termination.
Resolution:
The FA filed a Statement of Claim with FINRA Dispute Resolution, seeking expungement under FINRA Rule 8312(g)(1), by arguing that the termination disclosure was defamatory in nature and misleading. RID denied the allegations in its Statement of Answer.
The expungement hearing was conducted via videoconference. Alex Padla, Esq., presented the FA’s case with testimony and evidence, including sales performance data and communications with RID management, demonstrating the FA’s above-average performance. RID did not contest the evidence.
The FINRA Arbitrator reviewed the pleadings, testimony, and joint stipulation. Finding the termination disclosure misleading and defamatory in nature, the Arbitrator noted that the FA’s performance metrics did not support the “underperformance” claim.
On June 18, 2025, the Arbitrator ordered expungement of all references to the termination disclosure from the FA’s CRD and BrokerCheck® records, per FINRA Rule 8312(g)(1). The Reason for Termination on the Form U5 was amended to “Voluntary,” and the Termination Explanation was deleted entirely.
This decision restores the FA’s pristine record, enabling him to pursue his career without the burden of a misleading 2024 termination disclosure and reinforcing his dedication to professional excellence in financial services.
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