Dallas Advisor’s Customer Dispute Expunged By FINRA Panel

In 2022, after 11 years of exemplary service in the financial industry, this Dallas, Texas-based advisor faced his first customer dispute on his CRD and public BrokerCheck® records. The claim falsely alleged unauthorized trading resulting in tax consequences. For over two years, this baseless disclosure tarnished the advisor’s reputation and hindered his professional standing. Determined to clear his name, he retained HLBS Law to pursue expungement through FINRA Dispute Resolution.

This advisor had built a stellar reputation with Merrill Lynch, since 2016. In December 2020, he assumed management of a customer’s discretionary account following the termination of her previous advisor. The customer, a 48-year-old technology manager with 20 years of investment experience, had an annual income of $200,000, a $900,000 net worth, and a moderate-to-aggressive risk tolerance aimed at retirement planning. Her portfolio, valued at approximately $750,000 in liquid assets, was concentrated in a single investment strategy.

Upon review, the advisor recommended diversifying 50% of the customer’s assets into a new strategy to align with her risk tolerance and objectives. He discussed potential tax implications, and the customer approved the strategy orally, via email, and by signing a Portfolio Investment-Management Agreement granting the advisor discretionary trading authority. Trade confirmations and regular statements were provided, and the customer raised no concerns during regular reviews over ten months. In October 2021, the customer received a $20,000 tax bill, due to a 22% portfolio gain, which outperformed the market by 6%. She claimed to have misunderstood or forgotten the tax implications, despite prior discussions.

On February 25, 2022, the customer filed a dispute alleging unauthorized trading from January 2020 to October 2021. The advisor had had no involvement in the account before December 2020, rendering the allegations partially factually impossible. Merrill Lynch investigated and denied the claim, finding no evidence of wrongdoing. The customer did not pursue arbitration or litigation, yet the disclosure remained on the advisor’s records, misleadingly suggesting misconduct.

The advisor filed his Statement of Claim with FINRA Dispute Resolution, seeking expungement of the occurrence. He argued that the allegations were false and clearly erroneous, as he had documented authorization and no involvement in the account for the majority of the alleged period. Merrill Lynch filed an answer, did not oppose the request, and participated in the hearing without taking a position. The customer was served with all relevant documents but did not attend. The expungement hearing occurred via videoconference on April 14, 2025, with HLBS Law’s William Bean, Esq., presenting the advisor’s case through testimony, signed client documents, email communications, and other exhibits.

The three-arbitrator FINRA arbitration Panel reviewed the evidence, including the advisor’s testimony, the Portfolio Investment-Management Agreement, and Merrill Lynch’s investigation report. The Panel found the allegations factually impossible, clearly erroneous, and false under FINRA Rule 2080(b)(1)(A) and (C). The Panel noted that the advisor “had the Customer’s consent and documented authority to perform the diversification strategy” and that “the Customer received trade confirmations and regular statements, raising no objections until the tax bill.” The Panel further recognized that the advisor had had no involvement with the account from January 2020 to November 2020, making the allegations for that period factually impossible.

The Panel ordered the expungement of all references to the occurrence from the advisor’s CRD records, restoring his unblemished professional record. With this victory, the advisor can continue his career free from the shadow of a baseless 2022 disclosure, reaffirming his commitment to client trust and integrity.

Facing a similar situation? Contact our team today for a complimentary consultation to evaluate your case. Our experts will assess the viability of expungement and guide you through the process.