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Award Date: September 5, 2024
Claimant Representative: Austin Davis, J.D.
Respondent Firm: Guardian Investor Services LLC
Case Objective:
An LA-based financial advisor who has been in the industry for more than 30 years had one disclosure on his otherwise perfect records. While the claim had been dismissed, it listed detailed allegations and damages in excess of $400K. In hopes of achieving expungement of the meritless claim, the advisor hired HLBS Law to bring him through FINRA Dispute Resolution.
Summary:
In or around 2002, the advisor was a wholesaler for Guardian, marketing products to various broker-dealers. A customer of one of the broker-dealers was interested in a Guardian-indexed annuity. The advisor attended a meeting with the customer, where he detailed the features and benefits of the annuity. He did not make any representations to the customer.
The customer purchased the annuity through a representative of the broker-dealer of which she was a customer. The advisor received a commission from Guardian as a wholesaler, though he received no compensation from the broker-dealer and was not listed as the broker of record on the annuity.
In July 2002, a customer dispute was reported to the advisor’s records, alleging that the customer claimed she had sustained damages caused by the advisor’s misrepresentation and breach of fiduciary duty. Guardian denied the claim, but it remained on the advisor’s records for more than 20 years.
Resolution:
Guardian did not oppose the advisor’s request for expungement of the claim. The customer had notice of the expungement hearing, but she did not participate. The FINRA Arbitrator listened to the advisor’s testimony and the arguments on his behalf presented by Austin Davis, J.D. of HLBS Law.
The Arbitrator determined that “The Customer who filed the complaint was never [the advisor’s] client, but purchased the variable annuity through the broker[-]dealer.” He went on to state that the advisor’s “BrokerCheck Report itself reveals that the complaint was erroneous and false” and that the advisor’s “testimony irrefutably established that the purchaser of the variable annuity at issue who filed a claim was never [his] client[, nor] was there any payment to or settlement with the Customer.”
With the Arbitrator’s determination that the allegations met the FINRA Rule 2080 standards for expungement, this advisor will soon be moving on with his career, unencumbered by the meritless claim that had plagued his records for the last 20-plus years.