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Award Date: September 15, 2023
Claimant Representative: Chelsea Bauer, J.D., HLBS Law
Respondent Firm: Morgan Stanley
An Arizona-based registered rep with a near-30-year career in the financial services industry had a 12-year-old customer dispute alleging unsuitability on his CRD and public BrokerCheck records. Despite the fact that the firm had denied the claim, it remained on our advisor’s records for anyone to see. So he hired HLBS Law to seek expungement of the disclosure through FINRA Dispute Resolution.
Around 2007, an investor sought our advisor’s financial advice regarding her retirement, strategies to increase portfolio returns, and a financial plan for future income. Based on her financial situation and investor profile, our advisor recommended several options for investment, including initial public offerings (IPOs). The investor purchased the recommended IPOs in 2010 and 2011. The IPOs represented less than two percent of her portfolio.
Subsequently, the investor developed a personal friendship with a financial advisor at Raymond James, who actively pursued the investor’s business. That advisor’s manager at Raymond James called our advisor and informed him that the firm’s system had flagged emails, wherein the other advisor had coached the investor regarding how to fabricate details to lodge a formal complaint against our advisor. Sure enough, in July of 2011, a customer dispute by the investor was reported to our advisor’s records, alleging unsuitability.
Morgan Stanley participated in our advisor’s expungement hearing and did not oppose the request for expungement. The customer did not participate. The FINRA Arbitrator reviewed the relevant documents and exhibits. He listened to the advisor’s testimony and arguments put forth in support of expungement by Chelsea Bauer, J.D. of HLBS Law.
The Arbitrator penned his award, noting that the advisor’s testimony “[stressed] the appropriateness of his recommendations and the customer/advisor relationship he believed [he had had with the customer].” The Arbitrator noted that Morgan Stanley had “sent follow up letters and a final letter stating that after a three month investigation, it denied any compensation that was requested” and that, “Following this, no action was taken by the Customer to further her claims.” Given the information presented, the Arbitrator stated that “It is determined that the claim and allegation [ ] were false and that the present disclosure listed on [our advisor’s records] offers no meaningful investor protection or regulatory value.”
With the Arbitrator’s recommendation for expungement, our advisor’s records will soon be free of this meritless disclosure, after more than a decade of living with it.
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