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Award Date: June 5, 2024
Claimant Representative: Alex Padla, J.D., HLBS Law
Respondent Firm: 1717 Capital Management Company
Case Objective:
This New Jersey-based advisor in the midst of his fourth decade in the financial services industry had a single disclosure on his BrokerCheck record, which was a denied dispute from 2006. He hired HLBS Law to help him seek expungement of the complaint through FINRA Dispute Resolution.
Summary:
Around 2002, a customer who worked as a woodworker became a client of the advisor when the advisor inherited the customer’s account. A few months later, the customer called the advisor to inquire about an existing Nationwide Life Insurance Company variable life insurance policy that he owned. The advisor met with the customer to discuss the customer’s investor profile. The advisor was employed by Nationwide, and he wanted to work with the customer to improve upon the policy.
The customer was in excellent health for his age, and the advisor explained that he might be able to achieve an improved rate classification and secure additional coverage on the policy for no increase in premium. The advisor also explained that the customer had the option of paying a smaller premium for the same amount of coverage that he currently held. The customer wanted additional coverage to provide more liquidity for his family in the event of a premature death.
The customer applied for and received the improved rate class. The advisor then reviewed another Nationwide policy with the customer, which provided a $75,000 increase in death benefit for a premium increase of only a few dollars per month. The customer conducted a Section 1035 exchange for the new policy and appeared satisfied in his regular discussions with the advisor over the next few years.
Then in 2006, after speaking with his previous financial advisor who apparently encouraged the customer to file a complaint, the customer claimed that he was dissatisfied with the policy. Compliance issued him a letter, explaining that it found no basis to offer him any adjustment. Yet the disclosure marred the advisor’s BrokerCheck profile for the next 18 years.
Resolution:
The customer did not participate in the advisor’s FINRA arbitration hearing. The firm did participate, yet it did not oppose the advisor’s request for expungement. The Arbitrator reviewed and considered the pleadings submitted, and she listened to the advisor’s testimony. Alex Padla, J.D., HLBS Law, presented his arguments in favor of expungement on behalf of the advisor, as well.
After consideration of all that was presented to her, the Arbitrator determined that “The claim, allegation, or information is factually impossible or clearly erroneous; and the claim, allegation, or information is false.” She supported her decision by further stating that “Expungement is grated because there is no indication that the life insurance policy sold by [the advisor] to the Customer was inappropriate and/or unsuitable in any way[; m]oreover, the details of the policy, were explained to the Customer, he was provided with the prospectus and benefit illustration of the policy prior to purchasing it, and was further advised of his right of withdrawal.” She concluded by stating that, “Consequently, [the disclosure] should be expungement from [the advisor’s] CRD and BrokerCheck®[.]”
With the only disclosure on his BrokerCheck record soon to disappear, this advisor can continue his longstanding, excellent track record with records that reflect it.