This is an update of a "Street Sweeper" column that appeared on March 20, 2012.
On July 20, 2000, public customers filed a complaint against brokerage firm Dabney/Resnick/Imperial, LLC ("DRI") and registered representative Lisa A. Detanna seeking $75,000 damages. According to current Financial Industry Regulatory Authority ("FINRA") online records, on August 22, 2000, that dispute evolved into NASD Arbitration #00-03298, seeking $100,000 in damages based upon the following allegations:
TRUSTEE ALLEGES, INTER ALIA, COMMON LAW AND STATUTORY CAUSES OF ACTION WITH REGARD TO STOCK AND BOND TRANSACTIONS BY THE TRUST BETWEEN 1997 AND 2000.
On June 4, 2001, the Arbitration settled for $20,000. FINRA's current online records indicate under the "Summary" of this arbitration that
BROKER DID NOT CONTRIBUTE TO SETTLEMENT
How do claims involving transactions that occurred as far back as 15 years ago become the topic of today's Street Sweeper blog? Great question followed by one hell of an interesting answer.
In a FINRA Arbitration Statement of Claim filed in October 2011, Claimant Detanna sought the expungement from her Central Registration Depository records ("CRD") of the earlier 2000 NASD Arbitration. Naming the public customers who sued her in 2000 as the Respondents in her own case, Detanna demanded the expungement because she asserted that she was not involved in the customers' alleged investment-related sales practice violations and, as such, the claims against her were false.
In their Answer and Notice of Consent and Non-Opposition to the Statement of Claim for Expungement, Respondents confirmed their consent, non-opposition, endorsement and stipulation to Claimant Detanna's requested expungement. In fact, Respondents affirmed that Claimant Detanna was not involved in the sales practice violations alleged in their NASD ArbitrationComplaint.
Although the sole FINRA Arbitrator conducted a telephonic hearing, Respondents did not attend but supported the requested relief. During the expungement hearing, Claimant testified that she had no connection with the Respondents and had no involvement whatsoever in connection with the matters alleged in their 2000 NASD ArbitrationStatement of Claim.
In explaining her situation, Claimant noted that from March 1990 until August 1998, she was employed as a financial advisor with the now defunct DRI, which she left for Dean Witter (which subsequently became Morgan Stanley Smith Barney).
Two years after her resignation from DRI, Claimant received notice (in the year 2000) of the Respondents' Complaint, which alleged $100,000.00 in investment losses stemming from investments made at DRI through another financial advisor. Moreover, the losses alleged occurred through the year 2000, which was two years after Claimant's departure from DRI.
Claimant testified that she was never advised that there was a formal settlement agreement, nor did she receive a copy of same. DRI solely settled with the Respondents for $20,000.00. Claimant was not a party to the settlement, did not contribute to the settlement, and was not asked to contribute.
Because DRI has been defunct for many years, Claimant was unable to obtain a copy of the settlement agreement to present to the FINRA Arbitrator, and Respondents indicated that they did not retain their copy.
In consideration of all the facts presented, the FINRA Arbitrator recommended the sought expungement after determining that Claimant's only connection with the NASD Arbitration was that she was named in the original complaint as one of many members of a sales team at her former employer. The Arbitrator found it clear that Claimant had no involvement with the underlying allegations.
Why Detanna waited so long to seek her expungement escapes me but the typical answer is that she was involved in a long-term employment relationship that did not require submission of an employment application that brought up this thorn in her side. As with thousands of industry employees who had enjoyed stable employment with the likes of Bear Stearns, Lehman Brothers, Merrill Lynch, Wachovia, Smith Barney, once the rug is pulled out from under you, things that you had long lived with often prove troubling. Whatever happened here that prompted the need to clean up this festering wound should serve as a warning to all registered persons: It's best to strike while the iron is still hot.
On the other hand, as Claimant Detanna so aptly proved, just because you were victimized many years ago doesn't mean that you must abandon all hope. This seems like the perfect outcome for a registered person wrongly named in and complaint and who became the inadvertent victim of seemingly benign settlement in which she played no role and contributed no money.All that being said, negative marks on your record may often strike you as little more than cute, sleeping puppies. Many folks may tell you to live with it and get on with your life. Frankly, that's often sound advice. On the other hand, sleeping dogs often arise with a fright and may well sink their teeth into you. Perhaps you might consider the future ramification of that sleeping puppy of a problem - you know, like when it turns out to be a full grown, hungry Pit Bull.
In a Financial Industry Regulatory Authority ("FINRA") ArbitrationStatement of Claim filed in August 2012, Claimant Detanna alleged that she was not involved in the sales practice violations alleged in the public customers Respondents' 2003 Arbitration Complaint and now seeks to have the Complaint expunged from her Central Registration Depository ("CRD") record. In the Matter of the FINRA Arbitration Between Lisa Ann Detanna,Claimant vs. Ron Pinto and Alyse D. Pinto, Respondents (FINRA Arbitration 12-03097, January 25, 2013)
Appearing pro se, the Respondents asked that the Panel grant Claimant's request for expungement. The sole FINRA Arbitrator hearing this case recommended expungement based upon a finding that Detanna:
[W]as not involved in the alleged investment-related sales practice violation which led to the Respondents' complaint. According to the Claimant, her former partner was responsible for handling the Pinto accounts. . .