Stockbroker Preserves Reputation With Voluntary Termination

October 12, 2012

English: Pencil Eraser Deutsch: Radiergummi mi...

They put erasers on pencils for a reason

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in April 2012, Claimant Simms asserted causes of action including abuse of the Uniform Termination Notice For Securities Industry Registration (the "Form U5"), defamation, slander, and tortious interference with business relationships.  Claimant sought an order recommending the expungement of his Central Registration Depository record ("CRD") plus interest, costs, and fees. In theMatter of the FINRA Arbitration Between David G. Simms, Claimant, vs. Avalon Partners, Inc., Respondent (FINRA Arbitration 12-01478, October 5, 2012).

Respondent Avalon Partners did not file an Answer or enter an appearance. 

Erasing The Problem

The sole FINRA Arbitrator recommended the expungement of Claimant Simms' Form U5 as filed on August 1, 2007 based upon the defamatory nature of the disclosures.  The Arbitrator recommended that the Reason For Termination be expunged and replaced with "Voluntary," and that the Termination Explanation be revised to state "mutual agreement. Non compliance, non sales practice related."  Finally, the Arbitrator ordered Respondent to reimburse Claimant for the $300 "paper decision fee."

Bill Singers Comment

In the past few years we've seen massive layoffs on Wall Street. We've read of the demise of Lehman Brothers and Bear Stearns and of the euphemisticreductions in force at Merrill LynchWells Fargo,UBS, JP Morgan, Goldman Sachs, andMorgan Stanley.  All of that history is bad enough; however, sometimes the explanations for why an individual's registration was terminated mistakenly suggests misconduct - and sometimes the explanation is so blandly written as to instigate a whole host of erroneous inferences. In some situations, former employees are merely victimized by poor grammar or an inartful choice of words.  In other cases, there is nothing happenstance about the negative result because the intent was to jam-up the former employee.

In Simms, the former employee seemed troubled by language on his U5 that may have suggested that he had been fired for cause and that his termination was somehow related to violations of industry rules and regulations - and perhaps even involving disputed sales practices with public customers.  Since we have not been informed in the Decision as to the offensive language, we can only guess as to what was or was not stated.  Regardless, the Arbitrator's recommended modifications clarify that Simms' registration termination wasvoluntary and reached by mutual agreement and did not arise in connection with any compliance or customer issues.

For additional FINRA expungement arbitrations, READ: