Our Next Radio Show

Tune in tomorrow at 11:30 a.m. to 101.5 WORD-FM to hear Michele Conti discuss the “Top 10” things to consider and plan for to make your loved ones lives easier upon your passing.

The Alternative Option for Expunging CRD Records

It is incorrect for financial advisors to assume that the expunging of disclosure events from their Central Registration Depository ("CRD") records can only happen at the conclusion of an arbitration and only if the panel finds (a) that the customer's claims, allegations, or information is factually impossible or clearly erroneous, (b) that the advisors were not involved in the alleged misconduct, and/or (c) that the claim, allegation, or information is false. To the contrary, an alternative and independent route exists through the courts. Moreover, with a standard developing that courts can use when determining whether or not to grant expungement, courts are particularly well suited for expunging disclosure events (a) that are years, sometimes decades, old or (b) in situations where an arbitration panel has not made any findings of falsity or non-involvement as mentioned above.

Such a standard for the courts is necessary because FINRA's Rule 2080 governing expungements is surprisingly silent on how courts should go about determining whether or not to grant an expungement. See Reinking v. FINRA, 2011 U.S. Dist. LEXIS 5611 (W.D. Tx. 2011) and Bridge v. E*Trade, 2012 U.S. Dist. LEXIS 110693 (N.D. Ca. 2012). Indeed, as the Reinking court observed, the majority of Rule 2080's focus is on the standard to be used when determining whether or not FINRA may waive the obligation to be named as a party to the court proceedings. Reinking at *9. This is not, as Reinking observes, the standard courts are to use, or should use, when deciding to grant expungement as it is too exacting for a merits determination, since its purpose is to govern when FINRA will oppose an expungement not whether expungement should ultimately be granted. Reinking at *12.

Consequently, Reinking looked for guidance from the SEC's commentary on Rule 2080's predecessor, NASD Rule 2130. That commentary emphasizes striking the appropriate balance between the ability to remove information from the CRD that holds no regulatory value, while simultaneously preserving information in CRD that is valuable to investors and regulators. Reinking at *11. Accordingly, Reinking held that it too should weigh the regulatory value of the information to be expunged when weighing whether or not to grant expungement.

This Reinking standard, subsequently adopted and endorsed by Bridge, is also in keeping with other existing legal tenets that balance an individual's rights against society's interests, such as those governing the expungement of a criminal record wherein the harm to the individual must be balanced against the government's interest in preserving such records. cfn. Com. v. Wexler, 431 A2d 877 (Pa. 1981).

Practically speaking, and unlike the balance of Rule 2080, it allows a court to decide in a fair and balanced manner the oftentimes critical question - how long is too long for an event to remain an advisor's CRD report when the value of a prior event for investors and regulators arguably diminishes with each additional year. Accordingly, the Reinking standard allows a court to properly weigh an advisor's desire to remove a disclosure event that is behind them and to which they have responded with positive changes in practice against the regulatory value of keeping that same event in the CRD.

Consequently, expungement through the courts is possible thanks to Reinking's guidance.

This material is for informational purposes only. It is not and should not be solely relied on as legal advice in dealing with any specific situation.

Welcome to Katie Kenyon & Michael Monyok

Welcome to Katie Kenyon & Michael Monyok!

Katie joins the firm as a partner in the Litigation & Dispute Resolution and Employment Law & Benefits Groups. Here is the Pittsburgh Post-Gazette announcement.

Michael is a member of the firm’s Intellectual Property, Corporate & Business Law, and Litigation & Dispute Resolution Groups. Here is the Pittsburgh Business Times announcement.

Mergers, Purchases Need Cybersecurity Due Diligence

Patricia Farrell’s article “Mergers, Purchases Need Cybersecurity Due Diligence” recently appeared in the Pittsburgh Post-Gazette. You can access the online version using this link.

Next Radio Show

Tune in tomorrow at 11:30 a.m. to 101.5 WORD-FM to hear Michele Conti discuss the importance of planning ahead, both financially and legally speaking, and the major pitfalls that await if you don’t.

New Affordable Care Act FAQs

Jason Mettley

On Friday, November 7, 2014,  Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the Departments) issued new FAQs regarding the Affordable Care Act.

Most noteworthy, the Departments state that if an employer has an arrangement with its employees whereby the employer reimburses employees for the cost of an individual health insurance policy, that arrangement constitutes a "group health plan" for purposes of ERISA and the Code.  As a group health plan, the arrangement would not comply with the market reforms under the ACA thereby triggering penalties and excise taxes.  According to the Departments, the arrangement is a group health plan.  This would mean that the arrangement is also subject to all of the applicable requirements of ERISA (e.g., the need to have a written instrument, the need to file annual returns, etc.).

Employers should consult with their lawyer before eliminating any group health insurance policy.  It is critical to review the reasons for eliminating any existing policies and understand what the employer intends to do to replace the group health insurance.  There could be ramifications to the employer, including  fines and penalties, depending on what the employer is intending to do moving forward.

You can read the FAQs issued here.  Please contact Jason Mettley or any other Meyer, Unkovic & Scott LLP attorney with whom you have worked to discuss any questions you may have on the Affordable Care Act.

This material is for informational purposes only. It is not and should not be solely relied on as legal advice in dealing with any specific situation.

2015 Best Lawyers in America

Best Lawyers in America has named 21 Meyer, Unkovic & Scott attorneys as among the best lawyers in their practice areas across the country. You can read this article, "2015 Best Lawyers in America", to see which attorneys were named as Best Lawyers.