Ya Hear The One About The Stockbroker Who Listened to Idiots and Never Got His Record Expunged?

August 27, 2018

So . . . this guy calls me a few weeks ago and tells me this story about how he's been in the biz for a few decades and when the markets crashed for the Great Recession, he got two customer complaints, one was bull shit and his firm told the customer to shove it, the other case, well, you know, he hadn't done anything wrong but the firm settled it for peanuts, nuisance value they told him, and he was pissed off because he hadn't done anything wrong, and he was all set to fight it to the bloody end, when his employer said just go with the flow and move on, but he said no way, and refused to pay one penny towards the few thousand in cash handed over in this extortion racket to the customer. We spent a couple of hours on the phone over a few calls and I got the details, which pretty much supported the guy's version of events -- plus, being the circumspect kind of fellow that I am, I poked around on my own and confirmed his whole tale of woe about how "I really, really, really didn't do anything wrong but they settled one of the complaints anyway." I set out the costs for undertaking the filing of two expungement claims, detailed all the what-ifs, and gave my opinion that this unhappy stockbroker had a damn good shot at expunging the unsettled matter and a very good shot at clearing out the settled one too. Perhaps the most challenging aspect of the battle-plan was whether to file an expungement for the unsettled matter first (at least get that mark quickly removed) and then, using the momentum so to speak, seek an expungement of the second matter without having to deal with a "Yes" answer for the first matter (which, at that point, would have been expunged). I also presented the option of simply filing a two-for-one FINRA arbitration expungement claim and saving some time and money. My preference was to opt for the two expungements in one application. A couple of weeks later, the stockbroker telephones me and says that he spoke to some guys in the office and they told him that you can't get a settled customer complaint expunged. No way that FINRA will ever do that, those geniuses opined. On top of that, if you have two -- count 'em -- two complaints, FINRA will never, ever expunge the settled one under such circumstances. In response, I summoned up my 36 years of savvy and experience on Wall Street and told the potential client that the idiots who told him that he couldn't get an expungement of a settled matter were, just that, idiots. Well, he said, they seemed to know what they were talking about. Are any of them lawyers, I asked. No but, again, they were positive that I would only be wasting my money. Sensing that this potential client had fallen asleep next to an idiot pod near the office water cooler that had been planted by one of the idiots giving him wrong advice, I wished him well and simply got on with my life, having lost two hours of time that I will never recapture. Oh, and just for the hell of it, I hope that he reads today's BrokeAndBroker.com Blog about another stockbroker who didn't pay attention to the legal advice dispensed around the office water-cooler and he now has two "YES" answers on their way to two "NO" answers.

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in  January 2018, associated person Hill sought the expungement of what are referred to as Occurrences 1048483 and 1901793 from his Central Registration Depository records ("CRD") and $1 in compensatory damages. In the Matter of the FINRA Arbitration Between Kenneth Fredrick Hill, Claimant, vs. Merrill Lynch, Pierce, Fenner & Smith, Inc. , Respondent (FINRA Arbitration 18-00290, August 14, 2018). http://www.finra.org/sites/default/files/aao_documents/18-00290.pdf

Respondent Merrill Lynch generally denied the allegations and asserted various affirmative defenses. Notwithstanding, Respondent took no position on Claimant Hill's request for expungement of his CRD. Although notified of the expungement hearing, the customers did not participate and did not contest the requested relief. 

At the hearing, Claimant withdrew his request for $1 in compensatory damages. 


In recommending expungement of Occurrences 1901793 and 1048483, the sole FINRA Arbitrator found pursuant to FINRA Rule 2080 that the claim, allegation, or information is factually impossible or clearly erroneous; and false. 

Occurrence 1901793:

The FINRA Arbitrator characterized Occurrence Number 1901793 as involving a customer who had filed an arbitration claim and had:

settled for a minimal amount based solely on a business decision by Respondent. Customer later apologized for filing claim he admitted he should not have done so. In fact, customer wanted to maintain his account at Merrill Lynch with broker but Merrill Lynch refused. 

Occurrence 1044883:

The Arbitrator characterized Occurrence 1048483 as involving a customer who had:

filed a complaint for failure to liquidate after agreeing not to request liquidation pending meeting with the Claimant. The customer later affirmed that agreement during a conversation with Respondent's Compliance Department staff member. 

Bill Singer's Comment

Online FINRA BrokerCheck records as of August 27, 2018, disclose that Claimant Hill has been registered for 25 years: first with First Union Brokerage Service, Inc. from 1993 - 1999, and then with Merrill Lynch. The only two disclosures on Hill's BrokerCheck record fall under the title of "Customer Dispute," and both disclosures appear to correspond to the two items for which expungement was recommended. In the matter that appears to be cited in the arbitration as Occurrence 1901793, the firm settled without any financial contribution from Hill. In the matter that appears to correspond to Occurrence 1044883), Merrill Lynch denied the customer's complaint and no settlement ensured.

Compliments to Claimant Hill's lawyer: Eric Litow, Esq., AdvisorLaw LLC  https://www.advisorlawyer.com/of-counsel.html

  • FINRA Rule 2080: Obtaining Customer Dispute Expungement
  • FINRA Rule 2081: Prohibited Conditions Relating to Expungement of Customer Dispute
  • FINRA Rules 12805 and 13805: Expunging Customer-Dispute Information Under Rule 2080

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