Q: A client filed an arbitration action against my firm but did not name me as a respondent in the case although my name is mentioned as the claimant's broker in the body of the complaint. My branch manager said that I have to report this and that he'll have to file an Amended U4. Is he right?
—T.F., New York

A: The short answer is: Not exactly. In Notice to Members 08-20, FINRA has proposed revisions to question 14I(1) on the Form U4, and to question 7e on Form U5. The revisions would require reporting allegations of sales-practice violations made against registered persons in a civil lawsuit or arbitration where the registered person was not a named party.

At present, however, the proposed revisions have not been approved (the comment period expired May 27, 2008). As stated in the Notice: "Under the current reporting structure, a firm is not required to report on a registered person's Form U4 that a customer has alleged a sales-practice violation against such person in the body of a lawsuit or arbitration claim, unless the registered person also has been named as a defendant/respondent." But, it should be noted that the complaint might well be considered a "written customer complaint," which would be reportable under 14I(3).

Q: I left my old firm about a year and a half ago and started working with a new brokerage firm. Several months later, my new firm hired several other brokers from my old branch. My old firm filed an arbitration action against the new brokerage firm and claimed that my new firm "raided" a branch. Although I had nothing to do with the "raid," I was, unfortunately, named as one of the respondents.

After several months, I was able to get both my former employer and the new broker-dealer to agree that I should be dismissed from the arbitration. They filed a Joint Notice of Dismissal with FINRA Arbitration. The matter is still, however, appearing on my CRD report. I have since moved on to yet another firm. Is there any way I can get this removed from my CRD Report?
—B.S., Florida

A: Even though your current brokerage firm was not involved in the arbitration between your two former employers, it can, nevertheless, file an Amended U4 to update the status of the arbitration.

You would likely need to provide your compliance department with the pertinent documents such as the Joint Notice of Dismissal and any confirming documents from FINRA Arbitration.

If you didn't retain copies of those documents, you can get them from FINRA Arbitration. The CRD Department should change the classification of the item to make it "nondisclosable." But, the item may still be viewed if someone reviews the raw, unredacted, version of your CRD.

Since this was an intra-industry dispute and didn't involve customers or sales- practice violations, your new employer may be able to request that CRD delete the item from your record when it files the Amended U4. If your new firm refuses to file the Amended U4, you should ask your last employer to file an Amended U5.

Alan J. Foxman, Esq., is an attorney with the law firm of Lavalle, Brown, Ronan & Mullins, P.A., in Boca Raton, Fla. His comments are not intended to be legal advice. He can be reached at afoxman@lavallebrown.com.