Courts Side to Protect Investor

Courts Rule to Protect Investor

Recently, The US Court of Appeals for the District of Columbia reversed a lower court decision that allowed an investor to keep on file a registered complaint about a Maryland stockbroker with BrokerChek at FINRA. The conclusion was a result of a case that claimed to protect the public interest to protect the complaints of unhappy consumers.

Joseph Karsner sought to expunge a complaint from the permanent record in the state of Maryland. The appeal arose when Melanie Lubin, the Maryland securities commissioner, opposed Karsner's attempt to obliterate an arbitration case from his state licensing record.

In the case of Karsner v. Lothian, Karsner, an insurance agent recommended mutual funds that invested in unsafe stocks. According to court documents, Karsner allegedly put an investor in unsuitable investments and performed negligently in managing the investor's account, resulting in the investor losing more than $104,000.

After the investor complained, the case went to arbitration where the two sides agreed on a settlement with the investor receiving $47,000, but in exchange for the settlement the investor was asked to agree to the stipulation that all referenced about the dispute be dropped from the borker's Cenral Registration Depository record.

"The Court agreed with us that the State has an absolute right to protect its interests and those of its citizens from a broker's attempt to expunge records of proved or alleged professional misconduct," said Doug Gansler, Attorney General for the state of Maryland.

"It's important that the records be preserved so regulators can do their jobs, and so investors can make a decision on whom to do business with," Lubin said.