ARBITRATOR'S REPORT

Respondent was the successor in interest to the company that Claimant was affiliated with during the time he was the customer's financial advisor. Sometime after Respondent's February 2000 acquisition of Claimant's former employer, Claimant affiliated with another broker dealer. On or about August 28, 2019, Claimant filed a claim seeking expungement of customer dispute Occurrence Number 1114017 from his registration records maintained by the CRD dated December 20, 2002, which disclosed a customer complaint that Respondent settled, and to which Claimant contributed. Respondent's Motion to Dismiss is based on FINRA Rule 13206, which states: No claim shall be eligible for submission to arbitration under the Code where six years have elapsed from the occurrence or event giving rise to the claim. The panel will resolve any questions regarding the eligibility of a claim under this rule (hereinafter, the "Rule"). Accordingly, Respondent argues that Claimant's petition should be dismissed because 17 years have passed since the event giving rise to a claim, so dismissal is plainly required under the Rule; and as a matter of law, pursuant to Massachusetts' statutes of limitation and repose. 

For his part, Claimant argues that the time period for eligibility to arbitrate this matter should be tolled because: the Rule does not establish a 'bright line' for determining timeliness of making a claim and arbitrators have the authority to rule on eligibility on a case by case basis; publishing the disclosure constitutes an ongoing occurrence or event; and Claimant wasn't a party to the aforementioned settlement. 

Respondent counters that it has not yet located documents concerning Claimant's work history with the customer, and should not be required to incur additional expenses in light of the undisputed fact that the disclosure was known to Claimant at or near to the time it was filed in December 2002, and he could have filed his claim for expungement within the 6 years that followed. 

In addition to the claim filing limitation imposed by the Rule, Respondent argues that the statute of repose should apply to determining the timeliness of Claimant's petition for expungement. That argument is misplaced because the Massachusetts statute of repose reflects a legislative decision that is more important to protect certain defendants from old claims than it is to protect the rights of plaintiffs to enforce potentially meritorious claims. Under M.G.L. c. 260 the repose clock starts to run, not at the time the cause of action accrues, but at a time established by statute, which identifies numerous 'protected defendants' but none appear to ensue to the benefit of Respondent. Nevertheless, Respondent can avail itself of Massachusetts's statute of limitations, which limits to 6 years the time in which a plaintiff may bring an action "after the cause of action accrues". Notably, the same amount of time allowed by the Rule. It is true that the Rule authorizes arbitrators to toll the aforesaid time limits, however, the Rule contemplates that arbitrators will consider the circumstances of each case in making such a decision. 

Ordinarily, when a plaintiff knows or reasonably should know that he or she has suffered harm and that the harm was caused by the defendant's conduct, the statute of limitations begins to run ... unless that knowledge is delayed due to a defendant's fraudulent concealment or other misrepresentation. Here, Claimant testified during the hearing that he was aware of the disclosure on his CRD when it was filed. Moreover, when Respondent demanded his financial contribution to a settlement to resolve the Customer's complaint, Claimant testified that he was represented by counsel. Nonetheless, he claims he had no opportunity to defend himself against the charges before agreeing to contribute to the settlement. Interestingly, Claimant's CRD reflects another customer complaint that was settled in 2008 (by a different employer), but according to BrokerCheck® Claimant did not contribute to that settlement or challenge that disclosure. 

When questioned about his delay in asserting his rights, Claimant testified it's only been within the last three years that the subject disclosure demonstrably started to harm his business. Perhaps, but it strains credibility that Claimant would have paid such a significant sum of money to an organization, with whom he says he had no contractual relationship (and also blames for the recommendations that may have resulted in the customer's complaint) without at least filing a response to the disclosure citing the information he now relies upon to essentially re-open the nearly 17 year old customer dispute. Further, the cases Claimant cites as support to toll the 6 year time limit to bring a claim do not persuasively support a 12 year tolling of the statute of limitations under Massachusetts common law, or the Rule or the facts in this case. 

Next, Claimant provided little pertinent authority to support his theory that as long as the disclosure is publicly available his 'harm' arising from the event continues and therefore the disclosure constitutes an ongoing 'occurrence or event' rendering the 6 year statute of limitations immaterial. This theory is commonly applied in personal injury claims, but rarely extends to a myriad of publicly available adverse information i.e. credit reports, civil money damage judgments, inferior higher education transcripts, and divorce decrees containing off-putting personal information. All can exist in the public domain long-term and can have a negative impact on one's employment or business prospects. 

Finally, Claimant's argument that he wasn't a participant in the settlement is not quite true. He did contribute to the settlement amount, and with the aid of legal counsel. Further, any of the grounds for expungement specified in FINRA Rule 2080 were applicable, Claimant had ample opportunity during the six year period following the settlement to demand arbitration of the propriety of Respondent's actions as they affected him. Instead, he waited and now makes the bare assertion that "Following the events of September 11, 2001, Respondent insisted that clients stay invested and not sell their equities. Claimant had no involvement in making this recommendation to Customer." [See SOC at ¶ 9] This is a serious claim, which would require Respondent to defend itself even though Claimant has presented no prima facie evidence to fairly require such an order. 

FINRA's guidance to arbitrators states "An expungement of a disclosure on a financial advisor's U-5 is an extraordinary remedy that should be recommended only under appropriate circumstances."

In light of the foregoing, Respondent's Motion to Dismiss is granted.