- Big Fines For Bad Records: How The SEC’s Recent Action Affects RIAs
- Financial Advisor Exodus: 2024’s Biggest Trends & Your Strategic Move
- Staying Compliant: Colorado’s 2024 Investment Adviser Examination Priorities
- Demystifying The Maze: Your Guide To RIA Compliance
- Unlock Access To Industry Awards: How Negative Disclosure Expungement Can Propel Your Financial Advisory Career
*If you’re under FINRA or SEC investigation, or if you have a meritless disclosure on your BrokerCheck, CRD, IARD, or IAPD record, call us right now at (303) 952-4025 to talk with an attorney and receive a priority consultation at no charge.
Award Date: January 18, 2024
Claimant Representatives: Chelsea Bauer, J.D., HLBS Law
Respondent Firm: Lucia Securities, LLC
Case Objective & Summary:
In 2015, about 11 years into his career in financial services, this Southern-California-based advisor resigned from his broker-dealer firm and was subsequently sued by the firm. The firm then published an internal investigation Form U5 disclosure on the advisor’s records. Seeking to remove the disclosure of the event from his otherwise spotless records, the advisor hired HLBS Law to bring him through FINRA’s Dispute Resolution process.
The advisor joined Lucia Securities in the fall of 2011 and was never formally reprimanded, warned, or punished for any conduct, for the duration of his time with the firm. In early 2015, he downloaded a report from the firm’s computer system. As the report contained publicly available information, the advisor had no reason to believe that he had violated any firm policy or guideline by downloading it.
Soon thereafter, after growing uncomfortable with the firm’s current focus on selling proprietary investment products, the advisor chose to resign. On March 6, 2015, he notified the firm that he was resigning, effective immediately. Later that month, the firm initiated an internal investigation into the advisor’s business practices and sued the advisor, alleging “possession of trade secrets.”
The advisor ended up settling with the firm out of court, and the following September, the firm filed a Form U5 alleging an internal investigation into whether the advisor had taken client information without the authority to do so and used that information to contact clients, in violation of firm policy. The internal review disclosure then remained on the advisor’s records, until he sought assistance from HLBS Law.
The FINRA Arbitrator considered the pleadings, testimony, and evidence that was presented at the FINRA arbitration hearing. He listened to the arguments presented by Chelsea Bauer, J.D., HLBS Law, on behalf of the advisor and noted that Lucia Securities did not oppose the expungement effort.
The Arbitrator recommended the expungement of the Form U5 amendments corresponding with the internal review of the advisor’s records, on the basis that the statement was defamatory. He recommended deletion of the Disclosure Review Reporting Page from the advisor’s records, that the reason for termination be changed to “Voluntary,” and that the termination explanation appear blank on the advisor’s records.
Thanks to Chelsea Bauer, J.D., and HLBS Law, this advisor may now proceed with his career, free of the defamatory-in-nature mark on his records.