All's well that ends well, except, when, by the time it ends, you've been put through the ringer and emerge much worse for the wear and tear. In a recent FINRA arbitration, a stockbroker seems to have been put through hell by the false accusations of her former mother-in-law. The focus here is on "former," which, you know, pretty much sets the stage in terms of all your questions about "why" or "how come." Suffice it to say, the victimized stockbroker emerges from the regulatory ringer with an expungement recommendation, but I doubt that she feels the outcome off-set the stress she was put through.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in May 2018, associated person Claimant Wilson representing herself pro se sought the expungement of a settled customer complaint from her Central Registration Depository records ("CRD"). Claimant did not contribute to the settlement. In the Matter of the FINRA Arbitration Between Kathe Sorrentino Wilson, Claimant, vs. Edward D. Jones & Co., Respondents (FINRA Arbitration 18-02046, November 9, 2018).
Respondent Edward D. Jones and Co. did not take a position on Claimant's expungement request but raised affirmative defenses against any award of damages.
The customer participated in the expungement hearing but did not take a position on the requested relief.
In recommending expungement, the FINRA Arbitrator made a FINRA Rule 2080 finding that Claimant Sorrentino was not involved in the alleged investment-related sales practice violation, forgery, theft, misappropriation, or conversion of funds; and that the claim, allegation, or information is false. The Arbitrator offered this comprehensive rationale:
Claimant is alleged to have stolen funds from the Customer's (her former mother-in-law)
account. Claimant claims that in 2012 the Customer asked that her
account be closed and a check for the remaining funds be delivered to her.
Claimant claims that she was told the Customer was to be out of town for an
extended period of time so instead of closing the account and mailing a check,
that could be lost or stolen, with the Customer's approval Claimant transferred
the funds to an account held by the Customer and her son, Claimant's ex-husband,
who would then deliver a check to the Customer. In 2017, the
Customer made an inquiry to Respondent for the funds, but the funds could not
immediately be located.
The Customer testified that no such joint account existed. Respondent's counsel,
however, testified as to the existence of a joint account with the Customer and
her son. This information was provided with the Customer's permission and
contradicted the Customer's testimony that no such account existed. Therefore,
the Arbitrator found that the funds complained of were in fact transferred to the
joint account in 2012, but that her son did not deliver a check to the Customer, as
Claimant had represented. The Arbitrator also found that the Customer either
forgot about the joint account or did not want to blame her son. Therefore, the
Arbitrator found that Claimant did not commit theft or any other impropriety.
Charges and Fees
FINRA and/or the Arbitrator assessed the following charges/fees:
Respondent Edward Jones: $1,900 FINRA Member Surcharge; $3,750 FINRA Member Process Fee; $450 hearing session fees
Bill Singer's Comment
Oh for godsakes . . . FINRA actually charged Wilson nearly $2,000 after she was clearly victimized? Less of an outrage but still troubling is that Edward Jones got socked with over $6,000 in charges and fees. Assuming that this all arose from false allegations by a public customer, I'm not quite sure why this is an opportunity for FINRA to ring up its register, and I sure don't understand why the financial burden wasn't shifted to the customer. Notwithstanding that Wilson represented herself pro se, I don't think that most lawyers would have been able to sue the customer and recover damages, cost, and fees. Moreover, the customer was not named as a respondent in this expungement arbitration, as is typical of such matters.
Claimant Wilson's former mother-in-law sort of "forgot about the joint account" that she had with her son. Like mother like son, the former husband apparently sort of forgot about transferring the funds via check on to his mother. All of which prompted the sole FINRA Arbitrator to politely and ever-so-gently muse that the ex-mother-in-law "either forgot about the joint account or did not want to blame her son." Odd though, that same ex-mother-in-law didn't forget about suing her former daughter-in-law and had no qualms about blaming her son's ex-wife for stealing the funds at issue.
Online FINRA BrokerCheck records as of November 16, 2018, disclose that Claimant Wilson was first registered in 2008 and was associated with FINRA member firm Edward Jones from April 2008 to June 2013. The only disclosure on her record (which should soon be expunged per the above FINRA arbitrator's recommendation) is listed under "Customer Dispute - Settled," and involves a complaint received by Edward Jones on December 1, 2017, seeking at least $5,000 based upon allegations that:
The client alleges the financial advisor (her former daughter-in-law) removed funds from the client's account from August 2009 through October 2012.
The customer complaint was settled on April 4, 2018, for $4,209.80. The "Firm Statement" for this disclosure is very confusing and asserts two incompatible outcomes:
Based on the firm's review, the client's claim was denied.
Based on the firm's review, the client's claim was settled in the amount of $4,209.80.
Making matters worse, the "Broker Statement" for this disclosure is even more confusing and further muddies an already muddy mess:
Based on the firm's review, the client's claim was denied. Based on the firm's review, the client's claim was settled in the amount of $4,209.80. The funds were transferred out of customer account in October 2012; Rep left in June 2012.
What the hell? I mean, c'mon FINRA, get your act together!!
Did Edward Jones deny the claim and not make any settlement payment or did the firm settle the claim and make a $4,209.80. It can't be both, right?
Although I appreciate that the recommended expungement may well erase the entire customer complaint disclosure and will ultimately remove all the confusion, that's hardly the point. How did FINRA in its role as a regulator allow the filing on its BrokerCheck platform of two incompatible explanations about a customer complaint?