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Award Date: October 12, 2023
Claimant Representative: William Bean, J.D., HLBS Law
Respondent Firms: Equitable Advisors, LLC and USAA Financial Advisors, Inc.
An advisor in Florida who has been in the industry since 2000 had two disclosures on his public records. Both disclosures were the result of closed or denied customer disputes, and the advisor wanted the meritless allegations off of his public profile — so he hired HLBS Law to bring him through FINRA’s Dispute Resolution forum to seek expungement.
The first dispute was lodged by a woman who became a customer of the advisor with Equitable around 2010. The investor was seeking retirement planning. Our advisor made various recommendations to the investor, including a variable annuity with a guaranteed minimum income benefit (GMIB). The advisor explained the annuity to the investor and never indicated that it guaranteed any preservation of the principal. The investor purchased the annuity in early 2011 and signed all disclosures and other required written materials.
Later that year, the advisor transferred his registration from Equitable to USAA, and the investor ceased to be his client. In December 2011, the investor lodged a claim with Equitable, against the advisor, claiming that he had represented her that she was guaranteed a minimum of five percent per year from the annuity and that the annuity would not experience any downward fluctuation of principal. Equitable denied the claim.
In mid-2013 a retired U.S. Army officer became a customer of our advisor. The investor sought growth and income with a moderate-to-aggressive risk tolerance, and he required a substantial amount of liquidity. The advisor made various recommendations to the investor. However, the investor spoke separately to USAA’s corporate bond desk, and he independently selected a specific bond. The advisor did not solicit the bond, though he did explain it to the investor.
The investor purchased the bond, and it subsequently declined in value due to market fluctuation. While that bond ultimately recovered and matured at par value, and the investor suffered no loss, he nevertheless lodged a dispute with USAA against the advisor, falsely claiming that the advisor had recommended the bond and that it was not suitable. The claim was closed with no action taken by the firm.
The advisor filed a motion for a single arbitrator hearing, but FINRA denied that motion, and the hearing was overseen by a panel of three arbitrators. Neither firm participated in the hearing, and customers declined to do so, as well. The FINRA Arbitration Panel reviewed the documents and exhibits, which included customer investor profiles and firm letters regarding investigations into the customers’ claims. The Panel listened to the advisor’s testimony and the arguments in favor of expungement that was presented by William Bean, J.D.
Regarding the first customer’s dispute, the Panel noted that “Nowhere in the testimony or documents is there any mention of a non-fluctuating principal or a guaranteed 5% annual growth to that principal.” They pointed out that, “During the time [while the advisor] managed this Customer’s accounts, she never complained about any of his services,” and that, “It was only after he had left [Equitable] and was no longer managing her account that Customer A filed the Complaint.” The Panel concluded its explanation in favor of expungement of the claim, mentioning that Equitable “had investigated the Complaint; and, after completing the investigation, it concluded that the [advisor] had acted properly.”
When discussing the second claim, the Panel mentioned that “numerous recommendations were made by Respondent USAA Financial Advisors’ representatives concerning those bond investments, but as to the particular bond for which the Customer filed his complaint against the [advisor], the Customer chose to ignore the Respondent’s representatives’ advice, and instead, invested disproportionately in the one bond product, which was contrary to the advice of [the advisor] and his employer[.]” The Panel added that the complaint “occurred in July 2012 well before the bond maturity date” and that the advisor “testified that the bond did not decline.”
The Panel concluded that the information in the claims “still is available to the public and it has had a detrimental effect on [the advisor] gaining additional clients as well as affecting the ones he currently manages.” It stated that “the record is devoid of any proof that the [advisor] contributed any funds to any settlement, each of his employers having found through investigation that the matters had no merit.”
With a recommendation for expungement of both disclosures from FINRA’s three-arbitrator panel, and with no other disclosures on his BrokerCheck profile, this advisor will soon have a spotless record, thanks to HLBS Law.
Do you have a false, meritless, or completely erroneous disclosure on your public record? Contact us today for a complimentary consultation!
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