Unregistered CA Advisor Wins Expungement Of Damaging Termination Disclosure

This California-based former investment adviser and broker had an excellent record of over a decade of industry experience. However, a termination disclosure from 2019 hindered her ability to progress in her career. Seeking to restore her registrations and move forward professionally, she hired HLBS Law to guide her through the FINRA Dispute Resolution expungement process.

In October 2012, the advisor joined JP Morgan as a registered representative. A dedicated professional and Chinese American, she developed a clientele largely composed of Chinese individuals who preferred using the WeChat platform for communication. While striving to provide excellent customer service, the advisor sometimes sent confidential information to clients’ personal email addresses to accommodate their preferences. These actions were intended solely to serve the relevant clients, and no third party ever received the information.

Despite her efforts to redirect communications to approved channels, the advisor’s employer did not provide her with a work phone, making it challenging to strictly adhere to communication policies. None of the advisor’s actions resulted in client complaints.

In early March 2019, the Respondent terminated the advisor for allegedly violating firm policy by sending unsecured, confidential information to clients' personal emails and using WeChat to communicate with clients. This termination was recorded on her Form U5, which noted a “[non-securities] related” violation. 

Following her termination, the advisor faced severe difficulty securing new employment in the financial industry, due to the disclosure. This caused her significant loss of income and financial hardship.

Prior to the FINRA arbitration hearing, the Arbitrator reviewed the documents that had been submitted. Once in the hearing, he listened to the advisor’s testimony and the supporting arguments offered by Harris Freedman, J.D., HLBS Law.

The Arbitrator ultimately concluded that expungement should be recommended, “on the basis that the statement is defamatory in nature and tends to mislead[.]” The Arbitrator’s expungement recommendation included an amendment of the Reason for Termination on Form U5 to “Voluntary” and an expungement of the Termination Explanation from the advisor’s Form U5. He stated that the “Yes” answers to questions 7F(1) and 14J(1), on Forms U5 and U4 respectively, be changed to “No” answers and that the Termination Disclosure Detail and Reporting Pages be deleted from the CRD. 

Once the advisor’s expungement is confirmed and removed from her records, she can begin to rebuild her career without the burden of defamatory-in-nature allegations on her public and CRD records. 

Facing a similar situation? Contact our team today for a complimentary consultation to evaluate your case. Our experts will assess the viability of expungement and guide you through the process.