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Award Date: April 26, 2024
Claimant Representative: Harris Freedman, J.D., HLBS Law
Respondent Firm: Prudential Equity Group, LLC
Case Objective:
This Florida-based adviser was living with a sole customer dispute from 2002 on his records. In an effort to restore his records to perfect by the time he reaches 30 years in the financial industry, the advisor hired HLBS Law to bring him through FINRA Dispute Resolution’s expungement process.
Summary:
In the fall of 2001, an investor became a client of the advisor when he inherited her account from another advisor who had left the firm. The investor lived in Peru and felt that her asset allocation was too aggressive.
The investor completed a new questionnaire, and the advisor recommended a variety of investments as part of a diversified portfolio with less risk than the investor’s current portfolio. The advisor explained that implementation of the new portfolio would require liquidations, which would result in some losses, due to the current state of the market. The investor chose to wait for a market recovery before implementing the new portfolio.
Over the next year, the advisor spoke with the investor regularly. In September 2001, the tragic attacks on the World Trade Center and Pentagon resulted in steep market declines. The investor chose to continue to refrain from implementing the new portfolio.
Market declines continued into 2002, and the customer never proceeded with implementation of the new portfolio. In July 2002, she alleged in Spanish that the advisor had failed to change her account profile to reflect a more conservative investment objective and that she had lost over $50,000 as a result. The firm settled with her for $10,000, for business reasons, and the dispute has been visible on the advisor’s records ever since.
Result:
Prudential participated in the advisor’s expungement hearing and took no position on his request for expungement. The customer did not participate. The FINRA Arbitrator reviewed the advisor’s records and listened to his testimony, as well as to the arguments presented by Harris Freedman, J.D., HLBS Law.
The Arbitrator stated in his award that, “Based upon the Customer’s concerns of market volatility, (due to the tech market crash and the September 11, 2001, attacks), [the advisor had] recommended to the Customer that she place her investments in more conservative investments” and that, “Except for accepting one recommendation from [the advisor to place] one million [ ] in a money market account, the Customer rejected all other recommendations.”
The Arbitrator found that, based on the evidence presented, the allegations were factually impossible, clearly erroneous, and false, and he recommended expungement of the dispute from the advisor’s records. This expungement success means that the advisor will soon have perfect records, free from any disclosures whatsoever.