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Award Date: September 25, 2023
Claimant Representative: Michael Bessette, J.D., HLBS Law
Respondent Firm: Citigroup Global Markets, Inc.
Case Objective:
After 23 years in the financial services industry, this financial advisor in New Jersey sought to expunge the one mark on his otherwise perfect public record. His sole disclosure was the result of a denied customer dispute from 2006, which had sat on his record for 23 years. The advisor hired HLBS Law to bring him through the FINRA Dispute Resolution process.
Case Summary:
Before 2006, the advisor’s advisory team operated the equity compensation administration for supporting and servicing participants of a publicly traded corporation. The advisory team assisted those participants with exercising and executing their stock-option transactions. The advisory team serviced the relationship with each client in a limited capacity that was focused on the sole purpose of administrating the clients’ stock-option transactions. The advisory team was not permitted to provide any type of specific advice or guidance to any of the program participants.
In February 2006, one of the participants directed the liquidation of some of his stock. Because that participant was a director, the participant was informed that a certain protocol had to be followed, before his exercising or executing any transaction. The purpose of the protocol was to ensure that the proper preclearance and vetting of material, and nonpublic information had been followed. The participant was informed that following the protocol could cause a delay in the processing of his transaction request.
While the protocol was being followed, the stock declined dramatically. The participant chose not to follow through with the liquidation and instead lodged a formal complaint, alleging a failure to follow instructions. Although the claim was deemed meaningless and denied, the disclosure plagued the financial advisor’s records for nearly 25 years.
Result:
At the FINRA Dispute Resolution hearing, the Arbitrator listened to the facts, as presented by Michael Bessette, J.D. with HLBS Law and as testified to by the financial advisor. She read the documents submitted and reviewed the evidence, as well.
In her award, the Arbitrator specifically mentioned that, when the participant had called in to request the liquidation at issue, our advisor “was the member of the [advisory] team who happened to answer the phone.” She mentioned that “although [the participant] stated he had pre-clearance, [the advisor] informed him that the protocol could not be waived and had to be followed.” She also mentioned that the advisor “had no further contact with [the participant] after the initial call.”
The Arbitrator concluded that expungement of the claim was warranted, and this advisor will soon have a spotless public record for the first time since 2006.