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Award Date: December 6, 2023
Claimant Representative: Harris Freedman, J.D., HLBS Law
Respondent Firm: Merrill Lynch, Pierce, Fenner & Smith Incorporated
Case Objective & Summary:
An advisor in Colorado with a 43-year career had an impeccable record, aside from one denied customer dispute from 2012. He hired HLBS Law to seek expungement of the disclosure in FINRA’s Dispute Resolution forum.
Summary:
In or around 2007, the mother-in-law of the advisor’s assistant became his customer. The claimant’s assistant of approximately 30 years shared power of attorney over the customer’s account, along with the customer’s son. The customer’s account contained certificates of deposit and preferred stock.
Around early 2008, the assistant decided to purchase preferred shares of Merrill Lynch stock. She discussed the purchase with the advisor, who found it suitable for the customer. The Merrill Lynch stock constituted less than three percent of the customer’s portfolio.
In 2009, when Bank of America acquired Merrill Lynch, the stock was converted to common and preferred Bank of America stock. Due to the financial crisis at that time, the customer’s account value declined.
In October 2012, the customer ordered the liquidation of all positions in her account, with the single exception of the Bank of America common stock. The customer also terminated the assistant’s trading authority. Soon thereafter, the customer and her daughter chose to liquidate the Bank of America common stock, and the customer was no longer a client of the advisor. The Bank of America stocks had resulted in a net profit.
In December 2012, a customer dispute by the customer was reported to the advisor’s records, alleging an unsuitable investment. The firm denied the claim.
Result:
Merrill Lynch participated in the advisor’s expungement hearing and did not oppose his effort. The customer did not participate in the hearing. FINRA’s Arbitrator reviewed all of the documents submitted. He listened to the advisor’s testimony, and he heard the arguments in favor of expungement that were presented by Harris Freedman, J.D.
The Arbitrator recounted the events that had transpired before the customer’s claim. He pointed out that the assistant “continues to serve in this role to date.” The Arbitrator also mentioned that the customer had had “an entirely liquid six-figure net worth; that the Customer’s primary investment objective was to derive income with a moderate risk tolerance[,] and that the Customer’s secondary investment objective was growth.” Additionally, she had “represented to [the advisor] that she had low liquidity needs, and that her investment time horizon was ten years.”
The Arbitrator mentioned that, when the customer terminated the assistant’s power of attorney around October 2012, the customer informed the advisor “that she would thereafter be relying upon the advice of her daughter and sister for future investments.”
Importantly, the Arbitrator noted that “Following an investigation, [Merrill Lynch] determined that neither [the advisor] nor [the] assistant had engaged in any wrongdoing[.]”
With the Arbitrator having granted the advisor’s request for expungement, his 43-year track record will soon be impeccable, once again.