Maine Superior Court Grants Expungement of Customer Complaint Against Broker

A previous post discusses the high standard necessary to expunge a customer complaint from a broker's record, here.  

A recent Maine case demonstrates how that standard can be met.  In an unfortunate family dispute, Ferland v. Ferland, Docket No. CV-15-292 (Aug. 2, 2017), the claimant alleged that she had loaned about $721,408 to her son (a stockbroker a/k/a registered representative), which remained unpaid, and that the broker sold her an unsuitable annuity.  The broker denied all of the allegations.  The parties ultimately settled for $749,803, according to a record still available on Broker Check.  The Court's order describes the settlement as a "resolution" that involved "payment and/or restructuring of certain loans" made by the claimant to the broker.

The Court's order says that FINRA had been notified of the motion for expungement, but whether FINRA actually participated is unclear.

The order states that the broker's conduct "did not constitute investment-related sales practice violations, forgery, theft, misappropriation or conversion of funds."  More specifically, the claimant "freely loaned [the broker] and one of his business partners approximately [$721,408] as part of a commercial real estate transaction that was evidenced by a promissory note; secured by a life insurance policy on [the broker's] life; and resulted in scheduled payments to [the claimant]."  The loan was unrelated to the broker's role as financial advisor, as were most of the other allegations that formed the basis of the complaint.  As for the annuity, the claimant had purchased it from Allianz, not Ameriprise as she had alleged in her sworn complaint.  The court found that her allegations related to the annuity were baseless.

Although expungement is the rare exception, the outcome in this instance demonstrates that it is appropriate where allegations are "clearly erroneous" or "false."