FINRA Expungement Proceedings

PIABA Panel - Expungement Proceedings

SYK attorney Darlene Pasieczny Presents on FINRA Expungement Proceedings at PIABA’s Mid-Year Meeting.

On April 4, 2019, I joined co-panelist Kate McGrail and moderator Robert J. Girard II in Washington D.C. Together, we presented on FINRA expungement proceedings to an audience of securities attorneys, law professors, and state securities regulators attending PIABA’s Mid-Year Meeting.

Our main topics included:

  • The process for brokers to request expungement of customer dispute information from a broker’s CRD record.
  • The process for customer claimants to object to the request.
  • Proposed rule changes being considered by FINRA.

Current FINRA Rule 2080 of the Code of Arbitration Procedure for Customer Disputes provides the narrow grounds for expungement requests. FINRA Regulatory Notice 17-42 describes the potential changes including:

  • Limiting the time in which brokers may request expungement.
  • Creation of an Expungement Arbitrator Roster, with enhanced arbitrator qualification requirements, to hear expungement requests.
  • Requiring an additional finding that the customer dispute information has no investor protection or regulatory value.

The CRD is the Central Registration Depository, an online licensing and registration system for brokers and securities firms. Pursuant to FINRA rules, certain disclosure information must be reported for inclusion in the CRD record. This includes customer disputes – customer complaints, arbitrations and court actions.

Expungement of customer dispute information from a broker’s CRD record also means that the information is no longer publicly available through FINRA’s free online BrokerCheck. Because FINRA is clear that expungement is an “extraordinary remedy.”

That is in part because BrokerCheck is considered a major tool for investors to research the background of a financial professional. Wouldn’t you want to know if the person you are going to trust with your savings has a record of multiple customer complaints? Brokerage firms and state and federal securities regulatory agencies also use the CRD record when making hiring and licensing decisions, as well as in enforcement actions.

Darlene Pasieczny’s practice at Samuels Yoelin Kantor LLP focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, as well as fiduciary litigation in trust and estate disputes, and elder financial abuse.

SYK Seminar Series: Protecting Seniors with New Oregon Laws

 

 

Senate Bill 95, House Bill 2622 and FINRA Rules 2165 & 4512

What Oregon Securities Professionals, Financial Institutions and Trust Companies Need to Know

The Oregon Legislature passed Senate Bill 95 and House Bill 2622 to amend and create new law regarding reporting by certain securities professionals of suspected financial exploitation by others. For securities professionals, certain financial institutions and trust companies, the new bills allow discretionary temporary holds on disbursements and certain other account activity. FINRA Rules 2165 and 4512 create complementary requirements and discretionary holds for FINRA-registered brokers.

Fiduciary litigator Victoria Blachly and securities litigator/FINRA arbitrator Darlene Pasieczny explain how these new laws and rules seek to empower financial professionals to help their clients. Victoria and Darlene also will address capacity, red flags of potential financial abuse, and the reporting process for suspected exploitation.

To register, please contact us at events@samuelslaw.com or 503.226.2966.

Space is limited to the first 25 attendees to RSVP (required). Be sure to register soon to reserve your seat!

Lunch will be included with this free & informative presentation

“The Only Thing Is, I Didn’t Die In Time”

Two recent and sad stories involving financial abuse of the elderly have come to light locally. The first story is the tale of Evelyn Roth, an 83-year-old esophageal cancer patient who signed a power of attorney for her cousin and niece, who then liquidated her assets. The now-indicted relatives, Virginia Kuehn and Kathleen Jingling, told investigators the “doctors guaranteed us she would die by August.” (Another example of the problem with medical care in America? You can’t rely on the doctors’ guarantee? I think not.) As poor Roth stated, “The only thing is, I didn’t die in time.

 

What is it about people that when they are given a little bit of power (through a legal document like a power of attorney, through a joint bank account set up just to “help” with paying bills, or through a fiduciary position like a trustee), and a little bit of money, that their brains short-circuit and they start spending it as if it were their own? It’s not their money! There is no entitlement! There is no “well, nobody is going to know, so I’ll just take a bit from here or there!” As Roth’s cousins are learning, it’s not only unethical, it’s also illegal.

Gayla Ross just learned from a jury verdict in Washington County, Oregon, that she may have time in prison to contemplate her bad acts in taking $1 million from her 87-year-old mother, Clara Philpot, to finance Ross’ luxury home – and Philpot has been diagnosed with Alzheimer’s disease since 2002. As the court-appointed guardian stated, ‘It took Gayla less [than] two months to squander a lifetime of work.”  

Now the mortgage company is also in the cross-hairs, as the guardian proceeds with a lawsuit on behalf of Philpot. 

Be alert. With the aging population and an economy that may well bring out the worst in some people, financial elder abuse is a serious concern. 

Seek protection:

  • Get an attorney to prepare for estate planning, power of attorney, trust, or other legal needs well in advance of it ever becoming a problem;
  • Hire a criminal or civil attorney to recover losses;
  • Call the Oregon statewide hot line to report abuse: 1.800.232.3020;
  • Report abuse at  Aging and Seniors and People With Disabilities.