On November 3, 2015, Claimant filed an unopposed brief on whether the customer in an underlying dispute must be notified of a registered person's request for expungement relief. The Arbitrator finds that narrow circumstances discovered through case information and by testimony during the hearings persuade him to allow Claimant relief from FINRA's expanded expungement guidance that suggests associated person(s) provide a copy of their Statement of Claim to the customer involved in an underlying arbitration.The Arbitrator determined that no settlement agreement exists with relation to the BH and LH Complaint.
Claimant testified and demonstrated his method of introducing clients to potential investments: group meetings. individual sessions, careful explanations about each investment being suggested, and individual sessions with each potential client prior to sale. This method allowed each client several choices for their portfolio. The customer, BH, identified In the Statement of Claim, complained to the Respondent directly and made accusations that are inaccurate and unsubstantiated. As a matter of fact, the product was sold to LH for inclusion into her Individual Retirement Account ("IRA"). LH is the wife of BH and is a participant in other investments purchased through Claimant. This fact may cause BH to have no standing as a complainant about Claimant and his dealings with LH and her IRA Investments.Another peculiar Issue regarding this claim is the fact that no written complaint from BH, or anyone elss is known to exist. A phone call from BH to Suzanne Bond, an officer of Respondent's, caused Ms. Bond to speak with FINRA regulation about this issue. Ms. Bond, representing Respondent, then filed a report that became part of the CRD record of Claimant.A careful review by the Arbitrator of the New Account Form indicates no abuse of LH's Investment Objectives. These forms were completed at the time of the investment by LH.
FINRA Rule 4530. Reporting Requirements(a) Each member shall promptly report to FINRA, but in any event not later than 30 calendar days, after the member knows or should have known of the existence of any of the following:(1) the member or an associated person of the member:
. . .(B) is the subject of any written customer complaint involving allegations of theft or misappropriation of funds or securities or of forgery;. . .(G) is a defendant or respondent in any securities- or commodities-related civil litigation or arbitration, is a defendant or respondent in any financial-related insurance civil litigation or arbitration, or is the subject of any claim for damages by a customer, broker or dealer that relates to the provision of financial services or relates to a financial transaction, and such civil litigation, arbitration or claim for damages has been disposed of by judgment, award or settlement for an amount exceeding $15,000. However, when the member is the defendant or respondent or is the subject of any claim for damages by a customer, broker or dealer, then the reporting to FINRA shall be required only when such judgment, award or settlement is for an amount exceeding $25,000; or . . .. . .
(e) Nothing contained in this Rule shall eliminate, reduce or otherwise abrogate the responsibilities of a member or person associated with a member to promptly disclose required information on the Forms BD, U4 or U5, as applicable, to make any other required filings or to respond to FINRA with respect to any customer complaint, examination or inquiry. In addition, members are required to comply with the reporting obligations under paragraphs (a), (b) and (d) of this Rule, regardless of whether the information is reported or disclosed pursuant to any other rule or requirement, including the requirements of the Form BD. However, a member need not report: (1) an event otherwise required to be reported under paragraph (a)(1) of this Rule if the member discloses the event on the Form U4, consistent with the requirements of that form, and indicates, in such manner and format that FINRA may require, that such disclosure satisfies the requirements of paragraph (a)(1) of this Rule, as applicable; or (2) an event otherwise required to be reported under paragraphs (a) or (b) of this Rule if the member discloses the event on the Form U5, consistent with the requirements of that form.
Also READ: "FINRA Complains About CCO Complaint Reporting" (BrokeAndBroker.com Blog, October 29, 2015)(2) Have you ever been the subject of an investment-related, consumer-initiated (written or oral) complaint, which alleged that you were involved in one or more sales practice violations, and which:(a) was settled, prior to 05/18/2009, for an amount of $10,000 or more, or;(b) was settled, on or after 05/18/2009, for an amount of $15,000 or more?(3) Within the past twenty four (24) months, have you been the subject of an investment-related, consumer-initiated, written complaint, not otherwise reported under question 14I(2) above, which:(a) alleged that you were involved in one or more sales practice violations and contained a claim for compensatory damages of $5,000 or more (if no damage amount is alleged, the complaint must be reported unless the firm has made a good faith determination that the damages from the alleged conduct would be less than $5,000), or;(b) alleged that you were involved in forgery, theft, misappropriation or conversion of funds or securities?