FINRA U5 Expungement Award:

Form U5 Termination Disclosure Expunged From Veteran Advisor’s Records


Form U5 Termination Disclosure Expunged From Veteran Advisor’s Records


 

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Award Date: November 1, 2021
Hearing Site: New York, New York
Respondent Firm: Calton & Associates, Inc.
Claimant Representative: Dochtor Kennedy, MBA, J.D.


Case Objective:

A New Jersey-based advisor with nearly 30 years of experience in the financial services industry sought expungement of a 7-year-old Form U5 termination disclosure from his records. He hired AdvisorLaw to seek expungement through FINRA arbitration.


Case Summary:

Back in 2013, an entity that was planning to merge with the respondent firm recruited the advisor, and he joined the respondent firm in anticipation of the upcoming merger. Ultimately, the merger fell through due to a financing issue. As a result, the advisor was left contracted to the outside entity, yet working as a financial advisor at the local OSJ branch of the firm — a very uncomfortable position and working environment. The advisor had a professional relationship with an individual who sat on the boards of both entities, and they discussed the advisor creating his own registered investment adviser (RIA).

With full transparency, the advisor began the process of starting his own RIA. The RIA was not operational during the time while the advisor was registered with the respondent firm, and he earned no money through the RIA during that time. However, the respondent firm terminated the advisor for allegedly failing to disclose the RIA firm as an outside business activity (OBA).


Do you have a meritless disclosure on your BrokerCheck, IAPD, or CRD record?
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Result:

During the FINRA arbitration hearing, Dochtor Kennedy J.D., MBA was able to illustrate the “defamatory nature” of the information included in the disclosure. The Arbitrator recommended that the reason for termination be changed to “Voluntary” and that the termination explanation “be deleted in its entirety” from the CRD and Form U5.

The Arbitrator emphasized that his directive “shall apply to all references” to the reason for termination and termination explanation on the advisor’s records. The advisor will now be able to continue his career without a termination disclosure on his public records.




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