Securities License Issues, Internal Investigations, Form U5 & Expungement

Every department at a brokerage or investment firm has an important and highly regulated role in the investment process when it comes to selling investment products. When any of those roles fails, the problem disproportionately falls on the “boots on the ground” members of the firm, rather than the policymakers. They alone have it reflected on their CRD/BrokerCheck. It can be career ending. Malecki Law’s New York U5 Expungement Lawyers represent select investment professionals who we believe deserve a chance to be heard.

Our securities regulatory and compliance lawyers will represent financial industry professionals regarding:

• Day-to-Day Compliance
• Transactional Issues
• Operational Issues
• Supervisory Issues
• Employment Issues
• Legal & Regulatory Developments
• Supervisory Procedures and Compliance Manuals
• Representative Training
• FINRA Application, Amendment, and Continuation Issues
• SRO Examination
• Rules, Forms U-4, U-5, and Disclosure Reporting Pages (DRPs)

If you are under internal investigation or you have been put on administrative leave, you ought to be speaking to Malecki Law’s experienced New York U5 Expungement Lawyers and weighing your options. Do not wait until it is too late. Having a known securities lawyer at the start of an investigation, either behind the scenes or interacting with the firm’s lawyers can help prevent worst case scenarios and help lead the discussions in a more positive fashion.

If an internal investigation goes badly, you will likely be terminated and have some type of unfavorable language on your Form U5. You need a seasoned securities lawyer to participate in those discussions with your firm’s in-house counsel. Once your Form U5 termination notice is marked, it will take a FINRA arbitration and likely a couple of years to sort it out. Malecki Law’s U5 Expungement attorneys in New York had vast experience arbitrating FINRA expungement actions involving employment language and customer disputes.

FINRA Rule 2080 sets out the bases for which expungement may be granted only after a hearing on the merits, i.e., a full FINRA arbitration hearing (Complaint, Answer, Discovery and Hearing – with notice to any customers and employers involved). Essentially, you need to prove that what is on the Form U5 is false or does not involve you and in good conscience must be removed. If you are successful and it involved a customer, you need to bring a state or federal action to confirm the expungement award, and have it removed from the Central Registration Depository (“CRD”) so that it comes off state databases and off FINRA’s BrokerCheck and/or the SEC’s Registration Database for Registered Investment Advisor that feeds through BrokerCheck, www.AdvisorInfo.SEC.Gov.

Malecki Law’s U5 Expungement law firm in New York navigates the delicate balance that exists in expungement actions. A licensed professional must consider the regulatory impact of an expungement action. Will this open up issues with FINRA Enforcement? They must consider how to go about expungement. Do you try to expunge everything you do not agree with or do you choose only those you know you can remove. There are pros and cons in the strategy decisions and FINRA arbitration awards, including expungement awards are searchable and publicly available on FINRA’s website. Moreover, they require a court order, if a customer is involved, to have them removed from the CRD/BrokerCheck database. Also another publicly available document.

Brokerage firms, large RIAs and regulators often take advantage of the weaker players in the system, the easy, low road, often let most of the problem fall on the shoulders of individual professionals. What are often the systemic issues from higher up, resulted in nothing more than a mild reprimand from the regulators to the firm and a costly clean up by financial professionals – many of whom had to leave their chosen profession.

There is no designated seat at the FINRA table for representatives of the common broker. Firms and brokers are in distinct positions, and brokers have little to no voice in FINRA politics, creation of policies or procedures. Malecki Law’s securities lawyers take pleasure in representing the underrepresented professionals in the securities industry that are on the right side of the rules.

When it comes to individuals, though, who do not have the money or even often the time and emotional ability to take on the SEC or FINRA, enforcement and discipline levy a heavy hand on individuals – usually always the front line- without regard to an individual’s ability to pay, the amount of harm (if any) and the actual losses.

Small firms are put out of business. From a percentage of income and ability to pay basis, individual and small company/small firm compared to large firm fines represent an enormously higher percentage of income and assets. Why come down crushingly hard only on the retail professional, when it was the firm created the mess – but is allowed to continue with business as usual? Because the SEC and FINRA know the large firms – who often sit on their board - have the money to fight and FINRA and the SEC do not want to lose. You need to show the same resolve. Malecki Law’s lawyers aggressively represent you just as a firm is represented in these matters.

For further reading, please check the following blog posts:

• How can I get a customer complaint or customer arbitration removed from my CRD/BrokerCheck?
• Can I Sue My Brokerage Firm for Filing a False Form U5?