COMPLY-Ex-broker tries to use privacy lawsuit to clean up record

Thu Feb 27, 2014 12:46pm EST
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By Suzanne Barlyn

Feb 27 (Reuters) - A former broker is raising an unusual legal argument to erase an old black mark from his public record: He has sued the Financial Industry Regulatory Authority for violating his right to privacy.

Alan Santos-Buch says the industry-funded regulator continues to make details of a 1997 disciplinary case against him available on its website and in a regulatory document, making it difficult for the ex-broker to get jobs.

Santos-Buch, who worked for a now-defunct firm in Connecticut, had agreed to a $10,000 fine and 30-day suspension in 1997 to settle charges that he had signed and sent a document that guaranteed a customer's account against losses, a violation of industry rules. Santos-Buch, who had left the securities business the year before he was formally suspended, neither admitted nor denied the allegations.

At the time, he believed the details of his settlement would be publicly available for two years, based on talks he had with FINRA, according to Paul McMenamin, his New York lawyer. The regulator actually had no such rule in place until 2000.

But FINRA changed the rules 12 years after Santos-Buch settled to make regulatory sanctions against ex-brokers permanently available to the public. Those sanctions appear on BrokerCheck, the watchdog's free online service that investors can use to research stock brokers' professional histories.

One reason for the change, FINRA has said, is to help investors steer clear of people who leave the brokerage industry but still give advice about money as financial planners and other types of advisers.

But Santos-Buch, who is now in the energy business, says the rule has hurt him and still does. Prospective employers who run is name through search engines such as Google or Yahoo see a result with the heading "DISCIPLINARY ACTIONS," he says. It links to a 1997 monthly roundup of cases that FINRA posts in an archive on its website.

In his Feb. 2 lawsuit, Santos-Buch asked the U.S. District Court for the Southern District of New York to order FINRA to remove the disclosure from BrokerCheck and the reference to him in the disciplinary report.   Continued...