Morgan Stanley Advisor Wins Expungement Under FINRA's Stricter Rules

Posted on March 5th, 2025 at 1:42 PM
Morgan Stanley Advisor Wins Expungement Under FINRA's Stricter Rules

From the desk of Jim Eccleston at Eccleston Law

A FINRA arbitration panel granted a financial advisor’s request to expunge a 2022 customer complaint from her record, marking another test of FINRA’s stricter expungement rules. As reported by AdvisorHub, the customer was a sophisticated investor who had pursued a covered call strategy but later sought $1.32 million in damages. Morgan Stanley denied the claim.

Hobart’s expungement request met the higher standards established under FINRA’s updated rules, which now allow customers and state regulators to intervene. The panel of FINRA arbitrators found that the advisor should not be held responsible, as her role was limited to introducing the customer to colleagues managing the investment strategy. 

AdvisorHub reports that the arbitrators concluded that maintaining the complaint on her record would not benefit regulators, the investing public, or prospective broker-dealer employers. Morgan Stanley did not oppose her expungement request, which she filed in September. Under FINRA’s new rules, advisors face a two-year statute of limitations for expungement requests.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, finra

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