California Advisor’s Record Is Cleared With Three-Disclosure Expungement

*If you’re under FINRA or SEC investigation, or if you have a meritless disclosure on your BrokerCheck, CRD, IARD, or IAPD record, call us right now at (303) 952-4025 to talk with an attorney and receive a priority consultation at no charge.

Award Date: November 6, 2023
Claimant Representative: Kathleen Patchel, J.D., HLBS Law
Respondent Firm: Securities America, Inc. 

Case Objective: 

This advisor based in northern California has been in the industry since 2005. Between 2018 and 2019, his otherwise perfect record was marred by three customer dispute disclosures. All three alleged unsuitability and all of the claims had been settled with the customers. Seeking to expunge the disclosures from his records, the advisor hired HLBS Law to bring him through FINRA Dispute Resolution.

Case Summary:

All three of the claims centered around the same product: the ProShares VIX Short-Term Futures exchange-traded fund (ETF). The advisor recommended the ProShares ETF to all three customers, based on each customer’s investor profile. Additionally, each of the investors made specific requests for such a product. 

In 2017, all three customers purchased the ProShares ETF. While it initially performed well, the fund was closed by its managers around February 2018, after the value of the investment declined dramatically.

Each of the three customers lodged claims with the firm, alleging unsuitability. The first was settled for $250,000, the second was settled for $65,000, and the third was settled for $17,807. The advisor was not asked to contribute to any of the settlements.

The Result:  

None of the customers participated in the advisor’s expungement hearing. The firm participated, though it did not oppose the advisor’s request for expungement. The FINRA Arbitrator reviewed the settlement documentation and other documents that had been submitted by the advisor. He listened to the advisor’s testimony, as well as arguments presented by Kathleen Patchel, J.D., HLBS Law. 

In his award, the Arbitrator pointed out that “This case is unusual in that the three customers involved complained about the same investment[.]” He mentioned his finding that the advisor had “performed due diligence before recommending the investments into ProShares and ascertained it was profitable over a period of several years,” as well as that “Out of approximately one thousand clients, he recommended the investment to seven, investing his own funds with ProShares as well.” The Arbitrator went on to note that the advisor “did not solicit the trades but only offered ProShares to the small group who could take the risks, were willing to take high risks and expressed a desire to make more money and wanted quick growth.” Finally, the Arbitrator stated that “To everyone on Wall Street’s shock, the fund closed as it had lost 97% of its value” and that “It was completely unforeseeable.” 

With a recommendation for expungement of all three of the disclosures on his record, this advisor will soon return to the perfectly clear records that he had maintained before 2018.

If you’re interested in expunging a meritless, false, or defamatory disclosure from your record, contact AdvisorLaw today!

Expungement Award