Massachusetts Advisor Clears Record Of U5 Termination

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Award Date: May 12, 2023
Claimant Representatives: Dochtor Kennedy, J.D., MBA
Respondent Firm: Ernst & Young Capital Advisors, LLC

Case Objective:

Just five years into his career as a financial services professional, this advisor was terminated and hit with a disclosure alleging a violation of the firm’s expense policy. Wanting the benefits of a perfect record as he continues to build his book of business, this advisor hired AdvisorLaw to bring him through the FINRA Dispute Resolution process.

Case Summary:

In 2018, our advisor moved from a role with the firm’s general business to its investment banking practice. The two areas of the firm differed, and as a lateral hire, our advisor followed the commonly-adopted expense procedure advised by his colleagues in investment banking.
While our advisor understood firm policy for permissible expenses to include work-related meals and transportation, including rideshare costs, he was provided with no formal training regarding the specifics of the policy.

In step with the practices of his colleagues on the investment banking team, our advisor submitted expenses to the firm. The expenses were related to overtime work, and he never submitted work-related meal expenses that exceeded the $25 daily allowance. The reports submitted by our advisor were processed by the firm and approved, and our advisor wasn’t informed of any issues whatsoever.

Around February 2021, the firm performed a secondary audit of our advisor’s expense reports. Due to the misalignment of the dates when expenses occurred and the dates reflected on our advisor’s credit card statements, the audit determined that a rule had been violated.

Several managers confirmed that our advisor had not intended to defraud the firm, and they supported the efforts to dismiss any case against him. Our advisor reimbursed the firm in full for any disputed expenses, in the amount of $6,000.

Nevertheless, our advisor was notified by the firm in April of 2021 that he was being terminated due to an alleged violation of firm policy.


The firm submitted a Statement of Answer in response to our advisor’s Statement of Claim for FINRA arbitration, asserting various defenses. The FINRA Arbitrator reviewed the documents submitted at the hearing, heard arguments in support of expungement from Dochtor Kennedy, J.D., MBA and listened to our advisor’s testimony.

After doing so, the Arbitrator recommended the expungement of the disclosure and all references thereto from our advisor’s records. Specifically, the Arbitrator noted that our advisor “testified that he submitted reimbursement applications for expenses which he incurred for meals, transportation, and certain miscellaneous expenses[.]” The Arbitrator went on to state that he “finds from the testimony that there was no evidence of any intent to defraud and the expenses for which [our advisor] sought reimbursement were all properly incurred under [the firm’s] rules and that any disputed expenses which had been paid to [our advisor] were promptly reimbursed…” The Arbitrator concluded, saying that “the entry on [our advisor’s] Form U5 of his voluntary termination of his employment with [the firm] is misleading and damaging to [him] and in no way serves to protect any regulatory or public interest purpose and should therefore be expunged from [his] Form U5 and from the CRD.

With the only mark on his records soon gone, this advisor can continue to build his career and his book with the help of a clean public record.

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Expungement Award