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Securities License Issues, Internal Investigations, Form U5 & Expungement

From Jenice's interview for the Masters of the Courtroom series on
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From Jenice's interview for the Masters of the Courtroom series on
View Transcript

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:

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Testimonials From Former Clients
I highly recommend Jenice and her team at Malecki Law. I had a challenging, and lengthly case. Jenice was professional, very knowledgeable, and a pleasure to work with. She managed to make the process far less stressful during a very difficult time. They care about their clients, and it definitely shows. Mario
Jenice is truly a miracle worker and one of the top securities lawyers. She handled a very difficult case for us, displaying her legal knowledge, intelligence, and savviness throughout the process. I cannot recommend her enough. The quality of work from her team rivals that of corporate law firms. She was always available, extremely professional, and made sure to know all the details of the case. We were very fortunate to have been referred to Jenice and highly recommend her for any securities related legal issues. Nathan A.
An excellent professional who represented us in trial regarding a bank fraud, an unexpected and difficult time. A professional that worked hard, persevering and who stood toe to toe against firms that had a team of excellent lawyers backing them up. Her unflinching determination really stands out, it makes you feel you have someone who really cares about trying to recover what you lost from the people that wronged you. Salomon Levi
It is difficult to thank you in words when gratitude comes from the heart, so I will try to link feelings with writing. It is essential for us to mention your excellence as a professional, your aptitude on legal fields, and your unavoidable persistence. All of these virtues that elevate the profession you exercise in such an admirable way, go hand in hand with your sense of ethics, your human warmth and the transparency in your actions. To sum up, thank you for being a listening ear and for having the right word while transmitting information about the legal process. Having you as our representative during such an adverse situation was a privilege and enough reason for our eternal gratitude. Angeles Aparain
To say that my securities litigation was complex would be a severe understatement. With multiple parties involved and spanning many years, trying to understand the issues was daunting to say the least. Jenice and her team broke down the transactions by segment and by party uncovering every hidden expense. In the end, I was more than happy and could not thank Jenice and her team enough. I would not hesitate to recommend Jenice to anyone. She is highly professional, incredibly knowledgeable, well connected to industry experts, has a tireless work ethic and is so pleasant and easy to communicate with. Five stars for sure! Andrew Loughrane