Time Has Come Today In Stockbroker Expungement
June 24, 2015
You can't do something about something that you don't know anything about. Yeah, I know, not exactly profound words but they are at the heart of today's BrokeAndBroker.com Blog article about a 2015 expungement relating to a 2001 customer complaint. Which sort of reminds me of another saying: Better late than never. Read how one intrepid stockbroker won the fight to expunge a customer's complaint from his record. In the immortal words of the Chambers Brothers: "Time has come today!"
Case In Point
In a Financial Industry Regulatory Authority ("FINRA")
Arbitration Statement of Claim filed in September 2014, Claimant VanderPal
sought the expungement of a customer complaint from his Central Registration
Depository records ("CRD"). Respondent
Citigroup Global Markets's Answer indicated that it took no position with
regards to the relief sought. In the Matter of the FINRA Arbitration Between Geoffrey
Alan VanderPal, Claimant, vs. Citigroup Global Markets, Inc., Respondent (FINRA
Arbitration 14-02769, June 19, 2015).
On April 8, 2015, the parties submitted an agreement to
forego the initial pre-hearing conference and to proceed via an telephonic evidentiary
hearing. Although Respondent's Counsel participated during the evidentiary
hearing, the customers involved in the underly complaint did not attend, did
not request a continuance, and did not oppose the requested expungement.
SIDE BAR: According to online FINRA BrokerCheck records as of June 24, 2015, under the heading "Customer Dispute - Settled" only one matter appears, namely a complaint indicated as having been received on March 5, 2001, alleging $187,647 in damages and which was settled for $3,057.39 for this reason:
CLAIM SETTLED TO AVOID THE COSTS AND RISKS ASSOCIATED WITH LITIGATION
In reviewing the settlement involving the underlying
customer complaint, the FINRA Arbitration Panel found that Claimant VanderPal
was not asked to participate in and did not contribute financially to the
settlement, and that said settlement was no conditioned upon agreement by the
public customer not to oppose a request
for expungement.
In recommending the requested expungement, the Panel offered
this interesting rationale:
Customers filed a complaint with Claimant's former employer, rather than an arbitration claim. Claimant, who had left the firm's employment, was unaware of the nature of the complaint until approximately July, 2014. The complaint essentially alleged funds were invested in an annuity and other higher-risk investments although the customers needed the funds to generate mortgage payments. Claimant presented evidence that the allegation that he had recommended one of the mutual funds referenced in the complaint was clearly erroneous because the mutual fund was not in existence at the relevant time. Moreover, Claimant testified that the allegation that the customers needed the funds to pay a mortgage was also erroneous because the customers told him they owned their primary residence free and clear. In addition. Claimant presented evidence and testimony that demonstrated the investments that he recommended were not high-risk or aggressive; and that while the customers alleged losses of $187,000.00, these were the result of a generalized market downturn at the time rather than the unsuitability of the products. The Panel considered that the complaint was resolved by the Claimant's former employer without any actual settlement payment and only for a waiver of back-end mutual fund liquidation fees in the nominal amount of approximately $3,000.00. The Claimant herein did not contribute to the settlement. Claimant also testified that the reason he did not object to the firm's resolution of the matter at the time was because he was no longer employed by the firm, and that under the FINRA disclosure rules in effect at the time, the complaint would no longer appear on his record after two years.
Bill Singer's Comment
Claimant VanderPal alleged that he only first learned about the customer's complaint and attendant settlement in 2014, some 13 years after the fact. That likely explains the age of this matter.
Second, there is simply no way around this interesting point - and you have to tip your hat to whoever did the research on this issue:
Claimant presented evidence that the allegation that he had recommended one of the mutual funds referenced in the complaint was clearly erroneous because the mutual fund was not in existence at the relevant time.