Here at The Beck Law Firm, LLC, we routinely get calls from financial advisors from across the country looking for help in cleaning up their Form U4 where possible. Sometimes, they seek expungement of criminal history disclosures, typically for criminal charges against them from many years ago when they were young, but where disclosure of those details had clouded their Form U4 for years. In today's post, we'll share an overview of three recent cases we worked on, where we were able to successfully clean up, or prevent, certain criminal history disclosures from the Form U4 from the past month and a half or so.
In one case, a financial advisor with a RIA firm had a criminal charge against him from many years ago. He was charged with one felony count of burglary while in college. It was an interesting story, but the end result was that the felony was dropped by the prosecutor and the matter resolved for a very small fine. That FA worked with his a criminal defense lawyer and got the case sealed under state law. The effect under that state's law was that the proceedings were deemed not to have occurred. So, armed with the order to seal and the research we prepared, my firm successfully petitioned FINRA to expunge the disclosure from the IARD system, which in turn removed the matter from the FA's Form U4 and any public report on the investor.gov system. Now, this old event does not haunt the FA's career and he no longer has to potentially explain the matter to prospective clients.
In another case, a FA with a broker-dealer had a shoplifting charge against him from his college days in another state. The charge was dismissed without a conviction after he took a class sponsored by the court and did some community service, but he still had to report the charge on his U4. This FA worked with a criminal defense lawyer to get the case sealed under state law. The legal effect of the order in this particular case was that the FA could deny the existence of a record when asked about it for professional licensing or employment purposes. With that order and some legal research, we were able to successfully petition FINRA to expunge the matter from the FA's CRD record and U4. Again, this old event was removed from the FA's U4 and public disclosure report so that it was not visible to clients, prospects or prospective firms.
Finally, we assisted a prospective financial advisor who had a criminal case from here in Georgia many years ago when the FA to be was a teenager and was charged with misdemeanor shoplifting. That charge was ultimately dismissed without a conviction, and we were able to get the records restricted under Georgia law, so that the records of the matter were not available to the public and the dismissed charge was no longer required to be reported on the U4.
These are just some examples of how wise advisors have taken steps to clean up their U4 to help their career. If you have a criminal history disclosure on your U4, you might be wise to look into the matter to see if it can be expunged. The real key to this process is to obtain relief from the court or criminal justice system where your case was handled that results in the case being expunged, sealed or having the records restriction, with the effect of that action resulting in the records no longer being publicly available, among other things.
Not all states have laws allowing this type of action, even for cases that resolved without a conviction. So, this means that for some FAs, there won't be any way to clean up the U4 with respect to a criminal charge. But, many states provide some type of relief in certain circumstances, primarily for cases that concluded without a formal order of conviction, so it makes sense to check into your situation and understand what options may be available to you.
If you have obtained an expungement or sealing order from the court and want to seek to clean up your Form U4, I invite you to contact The Beck Law Firm, LLC for a consultation.
Update April 2021: The Beck Law Firm, LLC is excited to introduce our new free resource, The Financial Advisor's Guide to Arrests, Criminal Charges, and Related Form U4 Issues. Click here to request your free copy.