In the Matter of the Arbitration Between Darren Layne Meyer, Claimant, versus Ameriprise Financial Services, Inc., Respondent (FINRA 08-4008, March 26, 2010), Claimant Meyer alleged that Respondent Ameriprise placed defamatory statements on his Amended Form U5 dated October 3, 2007,and also engaged in acts of defamation and tortious interference with prospective economic advantage. Among other relief, Claimant sought at least $50,000 in compensatory damages, punitive damages, attorneys' fees, and an expungement of certain offending statements from his Form U5. Respondent Ameriprise generally denied the allegations and asserted various affirmative defenses.
Things Settle Down
On October 22, 2009, the parties informed the FINRA Arbitration Panel that they had resolved their dispute. After the parties announced their settlement, Claimant made a Motion for Expungement that Respondent did not oppose.
The Panel heard and considered Claimant's Motion for Expungement and ruled to grant expungement in this matter.
On December 1, 2009, the Panel issued an Order to the parties requiring that the parties provide the Panel with a copy of their Settlement Agreement.
On December 7, 2009, the parties provided a copy of their Settlement Agreement for the Panel's review. The Panel reviewed the final Settlement Agreement and considered the payments made pursuant thereto and any other terms and conditions of the Settlement Agreement .
Mechanics of an Expungement
The Panel set forth the full and final resolution as follows:
· The parties have entered into a confidential settlement agreement.
· The Panel recommends the expungement from Claimant Meyer's Central Registration Depository ("CRD") records of all references to the customer complaint received May 3, 2007, which alleged discretionary trading; and unauthorized, risky and illiquid investments . The recommendation is made with the understanding that pursuant to Notice to Members 04-16, Claimant must obtain confirmation from a court of competent jurisdiction before CRD will execute the expungement. Further, unless specifically waived to writing by FINRA, parties seeking judicial confirmation of an arbitration award containing expungement relief must name FINRA as an additional party and serve FINRA wtth all appropriate documents.
· Pursuant to Rule 13805 of the Arbitration Code, the Panel made the following Rule 2080 affirmative findings of fact:
o The claim, allegation, or information is factually impossible or clearly erroneous;
o the registered person was not involved in the alleged investment-related sales practice violation, forgery, theft, misappropriation, or conversion of funds; and
o the claim, allegation, or information is false.
· In accordance with Rule 2080, the Panel's findings are based upon it having:
o heard evidence from customers denying the allegations of discretionary trading,
o reviewed the Respondents records, and
o heard testimony from the Respondents personnel responsible for making the CRD entries concerning both the alleged discretionary trading and the customer complaint concerning allegedly unauthorized and risky investments.
· The Panel concluded that:
o the allegations of discretionary trading were false and defamatory;
o the customer complaint allegations were reported in a way that was meant to defame the Claimant; and
o it was reasonable and appropriate to order the expungement of all of the allegations concerning the allegedly unauthorized risky investments and the alleged discretionary trading, since both allegations were defamatory and the alleged discretionary trading was false.
· The Panel further found that the aforementioned customer complaint was dismissed by Respondent as groundless but was nevertheless reported by Respondent in a misleading and defamatory manner.
Getting to "NO"
The Panel recommended the expungement of the affirmative answers to Section 7B of Claimant Meyer's Amended Forms U-5 dated October 3, 2007, December 17, 2007 and December 18, 2007, filed by Ameriprise Financial Services, Inc. and maintained by the CRD. The current answer of "Yes" to question 7B should be expunged and replaced with "No." The Panel further recommends expungement in its entirety of all details related to question 7B in the Internal Review DRP section of the aforementioned Amended Forms U-5. The Panel makes these recommendations based on the defamatory nature of the information.
The Forms U-5 are not automatically amended to include the changes indicated above. Darren Layne Meyer must forward a copy of the Award to FINRA'a Registration and Disclosure Department for the amendments to be incorporated into the Forms U-5.
Bill Singer's Comment:
On Page 6 of the Form U5, the following Item requires a "yes" or "no" check:
Internal Review Disclosure
Currently is, or at termination was, the individual under internal review for fraud or wrongful taking of property, or violating investment-related statutes, regulations, rules or industry standards of conduct?
On Page 6 of the General Instructions section of Form U5, filers are admonished that
About Internal Review
Generally, the Internal Review Disclosure question in Question 7B and the Internal Review Reporting Page (DRP U5) are used to report matters relating to compliance, not matters of a competitive nature. Responses should not include situations involving employment related disputes between the firm and the individual. . .