January 24, 2018
Six years after a customer complained about allegedly unsuitable trades, a registered representative files a FINRA expungement arbitration challenging the posting of the customer's allegations on his industry record. Given the time that has passed, that's going to be quite a challenge. One FINRA arbitrator handled this case and provides us with a thoughtful rationale for recommending expungement. It's an interesting seven-year journey from customer complaint to a FINRA Arbitration Decision, and an intriguing exercise in how the pros and cons of such a case are weighed.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in April 2017, Claimant Mink sought the expungement from his Central Registration Depository record ("CRD") of an allegedly inaccurate customer complaint disclosure. On September 9, 2011, Mink's former employer, Respondent UBS, had denied the customer complaint, which did not evolve into a FINRA arbitration and there was no settlement of any claims. Claimant sought $1 in compensatory damages. In the Matter of the FINRA Arbitration Between Brandon Jeffrey Mink, Claimant, vs. UBS Financial Services, Inc., Respondent (FINRA Arbitration 17-01044, January 19, 2018).
Respondent UBS did not oppose Claimant's request for expungement but sought the denial of an award of damages and fees.
At the hearing, Claimant withdrew his request for compensatory damages in the amount of $1.00.
In recommending expungement, the sole FINRA Arbitrator made the required predicate Rule 2080 findings that the customer's claims were factually impossible or clearly erroneous and false. As set forth in part in the FINRA Arbitration Decision:
Specifically, the Arbitrator found that Claimant had a reasonable basis to believe that the disputed investment was suitable for the customer. Claimant's testimony indicated that the customer had actually invested in the disputed investment on more than one occasion prior to her complaint.
Further, the customer transferred her accounts to a broker near her home after relocating from the East coast. This transfer was complete on August, 29, 2011. On September 9, 2011, Respondent received the customer's complaint. On October 10, 2011, Respondent denied the complaint, and on October 27, 2011, the customer requested the liquidation of the securities at issue.
While acknowledging the potential seriousness of the customer complaint, the Arbitrator considered the fact that the complaint was made over 6 years earlier, denied administratively by Respondent within 30 days of receiving the complaint and the denial was not challenged by the customer. The testimony of Claimant indicated that the customer was an attorney. The customer's decision not to pursue her complaint must be given weight in this instance.
FINRA assessed an Initial Claim Filing Fee of $50 against Claimant Mink.Respondent UBS was assessed a $150 Member Surcharge. The entire $100 in hearing session fees were solely assessed against Claimant.
Bill Singer's Comment
Compliments to this FINRA arbitrator for a nuanced rationale that weighs the "potential seriousness of the customer complaint" against facts and circumstances that were favorable to Claimant Mink's case. You may agree or disagree with the arbitrator's conclusion but at least you are provided with enough content and context on which to base your opinion.
It may seem from the expungement recommendation that all's well that ends well and that Mink was exonerated by the arbitrator. To that extent, frankly, such appears to be the case. On the other hand, any registered rep's career may involve more issues than those that are resolved via an expungement arbitration.
Online FINRA BrokerCheck records disclose that Mink was first registered in 1995, and was registered with UBS from May 2008 until October 2016. Under the BrokerCheck heading "Employment Separation After Allegations" UBS reported that on October 4, 2016, it "Discharged" Mink based upon allegations that:
In response to his firm's above disclosure, Mink posted this "Statement" on BrokerCheck:
FA was discharged after a review determined that he violated firm policies relating to : using his personal email account, sending emails to prospects, using customized reports with clients, responding to a client's request while abroad, and reporting of customer complaints.
During my time with the firm, I complied with all UBS policies. Any alleged violation of firm email policies was inadvertent. Emails to prospects issue was result of a change in policy. I thought this was an exempt communication because sent to less than 25 clients. I ceased conduct when notified. None of my emails involved research reports, an investment recommendation or promotion of Firm product or service Each of my clients connected to the emails have stated in writing that I acted entirely in each of their best interest. On one occasion I forwarded information relating to an approved OBA, a voluntary charity, from my UBS email to my own personal account. On one occasion I responded to a client concern about market performance of an authorized investment and immediately advised branch management of my response. The manager accepted my response, and client took no further action. On a single occasion I responded to a client's inquiry while I was on vacation. On one occasion I erroneously responded that an email had an 'internal use only' legend when in fact it did not. None of my actions resulted in any claims, liability, exposure or actual loss to the firm or any client.
After resolution of these matters, UBS did not impose heightened supervision, or restrict my activities in any way.
FINRA Rule 2080: Obtaining Customer Dispute Expungement
FINRA Rule 2081: Prohibited Conditions Relating to Expungement of Customer Dispute
FINRA Rules 12805 and 13805: Expunging Customer-Dispute Information Under Rule 2080
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