FINRA U5 Expungement Award:

Advisor Achieves Expungement Of A 2008 Termination Disclosure

FINRA U5 Expungement Award:

Advisor Achieves Expungement Of A 2008 Form U5 Termination Disclosure

 

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Award Date: August 12, 2021
Hearing Site: Wilmington, Delaware
Respondent Firm: FSC Securities Corporation
Claimant Representative: Dochtor Kennedy, MBA, J.D., and Harris Freedman, J.D.


Case Objective:

A Pennsylvania-based, 21-year veteran of the industry was terminated in November of 2008 for allegedly violating firm policy in the process of executing non-traded REIT transactions. He then incurred the consequences of a Form U5 termination disclosure on his records for over 12 years before seeking expungement with AdvisorLaw.


Case Summary:

For about eight years, between 2000 and 2008, the advisor worked with a partner at the respondent firm. When appropriate, the team recommended non-traded REITs to customers who wanted to limit their exposure to market volatility. The firm reviewed all of the REIT purchases and approved them as suitable investments for the customers.


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In 2008, firm compliance investigated the team’s REIT sales and alleged that there were nine cases in which the team failed to follow industry statutes, regulations, rules, or standards of conduct. The firm told the advisor and his partner that both were permitted to resign and published Forms U5 indicating that the reps violated firm policy for non-traded REITs. Following the terminations, FINRA investigated the situation and took no action.


Result:

Upon hearing the testimony and reviewing the exhibits in FINRA Arbitration, the Arbitrator determined that the information included in the Form U5 termination disclosure was of a “defamatory nature” and recommended expungement. The advisor may now move forward, free of a negative termination mark on his CRD and BrokerCheck records.




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