FINRA Expungement Award:

Advisor requests removal of single denied customer dispute disclosure

 

Award Date: March 2nd, 2021
Hearing Site: New York, New York
Respondent Firm: Morgan Stanley & Co. LLC
Claimant Representative: Dochtor Kennedy, MBA, JD


Case Objective:

A financial advisor out of New York who is growing his practice requests removal of a single, denied customer dispute disclosure pertaining to the illiquidity in the auction rate security (ARS) market that occurred in 2008.


Case Summary:

Early in 2008, our financial advisor received an unsolicited request from a customer to purchase ARSs, largely due to an article that the client had read in The Wall Street Journal. The purchase of ARSs was part of a strategy devised by the customer to capture default yields over time. The financial advisor discussed all details surrounding the ARS illiquidity issue with the customer prior to purchase.

After suffering losses, the customer alleged that the advisor had not thoroughly explained the risks and lodged a complaint with the broker-dealer. Firm compliance investigated, found no merit to the allegations against the advisor, and denied the complaint and request for damages outright. The customer never filed to arbitrate his claim — in fact, he’s still a client of the financial advisor today.


Result:

Pursuant to Rule 13805 of the Code of Arbitration Procedure, the Arbitrator found that all claims and allegations made by the investor were indeed false and recommended expungement pursuant to Rule 2080.

Upon expungement of the only customer dispute that the financial advisor had on his record, his good name has been restored in the marketplace.




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