Articles Posted in FINRA

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Every day, dozens of people in Manhattan are arrested for allegedly shoplifting at major department stores, such as Macy’s, Bloomingdale’s, Sak’s and Nordstrom. Security guards at these stores are oftentimes mistaken in their assessments and rough in their handling of suspects. As such, the experience of being apprehended by store security guards and accused of shoplifting can be jarring and traumatic. Typically, suspects are brought to a private room in the department store and interrogated by security guards. Then, they are forced to sign a trespass notice acknowledging that they are no longer welcome in the store (a warning that they could be arrested for trespassing should they ever return). Afterwards, police arrive and place the suspect in handcuffs and typically take them back to their precinct, fingerprint them, put them in a holding cell for a few hours, and then issue a Desk Appearance Ticket to the suspect and release the suspect. They are typically charged with a violation of Penal Law Section 155.25, Petit Larceny, a Class A misdemeanor carrying a maximum penalty of one year in jail.

A person who receives a Desk Appearance Ticket has in fact been arrested. The Desk Appearance Ticket (DAT) instructs the arrested person to appear in court on a future date for the arraignment, or first appearance in court. Usually these arraignment dates are anywhere from two to six weeks later. This at least gives the person some time to choose a good attorney to accompany them to court.

These cases can present numerous problems for people with particular backgrounds. For example, many of the people who receive these sorts of DATs are tourists from out of town or even out of the country. Returning back to New York for a court appearance can be difficult if not impossible for such people. Matthew Galluzzo routinely makes arrangements for out-of-town clients to appear virtually or via affidavit in these matters, and can possibly assist you if that is an issue.

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Many professionals – especially those that work in the finance industry – are unpleasantly surprised when records of a prior case they believed to be sealed pursuant to an ACD have been discovered by prospective employers who conduct background checks. This is often accompanied by embarrassing and/or devastating consequences. How can this happen if the case was “sealed,” and what, if anything, can be done?

First, some background: When you are arrested for any state crime (such as misdemeanor shoplifting, theft of services, assault, or possession of drugs), you get fingerprinted by the police, which creates an “arrest event” in the system. If this is your first time being arrested, it also creates a New York State ID number (“NYSID”) which is associated with your fingerprints (some individuals who work in sensitive industries like law enforcement, finance/securities, and teaching may have already been issued a NYSID for certification). The arrest event not only contains your fingerprints, but also some details about your case – namely, the date, time, precinct of arrest, and the criminal charge(s) as designated by the arresting officer. The arrest event is then simultaneously sent to both the Division of Criminal Justice Services (the New York state agency responsible for the maintenance of criminal records) and the Federal Bureau of Investigations, which maintains a database of criminal records from across the country called the “Interstate Identification Index.”

An ACD (adjournment in contemplation of dismissal, as described by New York Criminal Procedure Law Sections 170.50 and 170.55) is typically a great result for a criminal defendant; all the defendant has to do is stay out of trouble for a measure of time and possibly perform some community service, then the case is dismissed and sealed pursuant to CPL Section 160.55. The problem is that the authority for this sealing provision is found in state law, and does not govern the conduct of the Federal Bureau of Investigation, which maintains its own database of criminal records. Thus, when the state agency updates its records after ACD dismissal, there is no guarantee that the federal database will also be updated to reflect the sealing of the case. Certain individuals (like FINRA professionals) are screened by employment checks against this federal database, to which FINRA has access. Thus, unless affirmative steps are taken to ensure that the FBI database is updated to reflect the dismissal and sealing of the state law charges, there is no reason to have any confidence that a background check of a FINRA professional will be “safe” for a professional that has received an ACD.

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Zachary H. Johnson of The Law Office of Matthew Galluzzo successfully represented Eric Butler in a FINRA arbitration against Morgan Stanley involving a dispute over signing bonuses paid to Mr. Butler when he joined Morgan Stanley. The case resulted in a win for Butler — he was allowed to keep his signing bonus. Johnson worked closely with of counsel Seth B. Chandler in securing the victory after a full-blown evidentiary hearing at FINRA's lower Manhattan offices.

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