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Award Date: April 11, 2024
Claimant Representative: Peter Lindholm, J.D., HLBS Law
Respondent Firm: Chase Investment Services Corp.
Case Objective:
An advisor in Illinois who began his career in the industry back in 2001 had a sole customer dispute on his CRD and public BrokerCheck records. The claim had been lodged in 2011 and closed with no action taken, but it remained on the advisor’s records nonetheless. Tired of living with the disclosure, the advisor hired HLBS Law to guide him through FINRA’s Dispute Resolution process.
Summary:
In mid-2010, a customer called Chase’s baking division asked to speak with an investment advisor and was directed to the advisor. The customer was dissatisfied with his current advisor and concerned about market volatility.
The advisor prepared a full financial plan for the customer and presented it to him. The recommended investments included a variable annuity from Pacific Life. The annuity would offer the customer income protection from market volatility, as well as access to monthly withdrawals. The customer purchased the Pacific Life annuity through a Section 1035 exchange of another annuity that he owned which was out of its surrender period. The Pacific Life annuity represented approximately 18% of the customer’s portfolio.
In March 2011, the customer sent a letter to Chase, claiming that he believed that the Pacific Life annuity was not a suitable investment for him and requesting that its purchase be reversed. In May 2011, Chase responded, informing the customer that a review of his purchase of the annuity had determined that it was suitable for him and that Chase would not be taking any corrective action. In June 2011, the advisor transferred his registration away from Chase.
That November, a customer dispute by the customer was reported to the advisor’s records, alleging unsuitability in connection with the sale of a variable annuity and requesting $90,000 in damages. Since August 2012, the dispute has been listed on the advisor’s records as “Closed” or “No Action.”
Result:
Chase participated in the expungement hearing and did not oppose the advisor’s request for expungement. The customer who lodged the claim had passed away, and no one attended the advisor’s expungement hearing on the customer’s behalf. The FINRA Arbitrator reviewed the pleadings that had been submitted. He listened to arguments on behalf of the advisor presented by Peter Lindholm, J.D., as well as to the advisor’s testimony.
The Arbitrator noted that, before purchase, “The Customer affirmed his understanding of the Pacific Life annuity” and that Chase “had determined that the annuity was a suitable investment for a client such as the Customer.” He pointed out that the dispute had been closed with no action, that Chase had not challenged the advisor’s expungement request, and that the customer did not take part in the hearing.
Ultimately, the Arbitrator concluded that “the claim of the Customer is erroneous under FINRA Rule 2080(b)(1)(A), and the claim of the Customer is false under FINRA Rule 2080(b)(1)(C).”
With the Arbitrator’s award in favor of the expungement of the claim, this advisor will soon have a record reflecting zero customer disputes.