An advisor has won expungement of Form U5 language he claimed was defamatory and preventing him from finding employment.
An arbitrator last week rewrote the CRD termination language for Benjamin Zimbel, who was discharged from Horsham, Pennsylvania–based Hornor, Townsend & Kent in 2021, after the firm charged that he had altered client documents without proper authorization and used his personal email account to communicate with clients.
Zimbel worked at HTK subsidiary Concord Wealth Management, in Wakefield, Massachusetts, and was discharged on April 30, 2021, less than three weeks after having been questioned by an attorney for HTK’s parent, The Penn Mutual Life Insurance Co., according to his complaint in a companion civil action. The attorney asked whether Zimbel had altered information on client-onboarding documents and whether the clients’ signatures were authentic, per the complaint.
Zimbel’s Form U5 indicated that he was discharged “for violation of the member firm’s procedures with respect to client communications and signatures.” Zimbel claimed that the language was defamatory and suggested forgery, according to the Financial Industry Regulatory Authority arbitrator’s written decision.
During the arbitration, Zimbel acknowledged having altered client-onboarding documents but claimed that all alterations were made at the client’s request or the direction of an HTK supervisor. Zimbel also claimed that some alterations were made not by him but by the firm’s onboarding director or another firm employee.
Zimbel acknowledged having allowed customers to submit documents via the Google Drive platform, which was not approved for such use by the firm. Zimbel claimed that the firm had not established a written policy regarding use of Google Drive, and he contended that the clients expressed a preference for that platform’s ease of use.
Zimbel further claimed that he allowed two clients — his aunt and uncle — to submit documents to his personal email address because his HTK emails to them were being treated as junk mail. He contended that all the actions at issue were undertaken during a period in which he was working remotely, with limited in-person client contact, as a result of restrictions related to the Covid-19 pandemic.
Zimbel’s case was strengthened by arbitrator Richard Grahn’s preclusion of HTK’s relevant communication policies. According to Grahn’s written decision, the firm failed — despite repeated requests — to timely exchange those policies. With the policies out of play in the proceedings, the firm could not establish that Zimbel had violated a written policy or procedure, though it did show that its own communication systems had no record of Zimbel having communicated with clients on the dates on which the onboarding documents were said to have been altered.
Zimbel, meanwhile, presented testimony from seven clients during the three-session arbitration, which was conducted via video teleconference. The clients, whose onboarding documents were among those at issue, contended that any alterations were accurate and reflected their intentions, that the signatures were theirs, and that they had no complaints regarding the documents.
Grahn concluded that Zimbel’s Form U5 language was “vague, inaccurate and defamatory.” He accepted Zimbel’s claim that there was no intent to violate HTK policies and that the onboarding forms at issue were accurate, signed by the clients themselves and reflective of the clients’ wishes. He ordered the termination language to be changed to read, “The representative was terminated while under investigation for alleged violation of company policy that was unfounded.”
Grahn also ordered Zimbel’s Form U5 revised to include a “no” response, rather than “yes,” to a question about whether the filing was for an employment separation after allegations.
Zimbel had also asserted contract, tort and statutory claims against HTK, but those claims were settled independent of the arbitration. Terms were not disclosed.
Zimbel first registered in 2012, at Voya Financial Advisors, according to his BrokerCheck record. He moved to Purshe Kaplan Sterling Investments in 2014 and joined HTK in 2015. He has not registered since separating from HTK.
Zimbel did not respond to a social media request seeking comment, and an HTK spokesperson declined to comment.