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Award Date: April 1st, 2021
Hearing Site: Dallas, TX
Respondent Firm: Merrill Lynch, Pierce, Fenner & Smith, Inc.
Claimant Representative: Harris Freedman, J.D., and Dochtor Kennedy, MBA, JD
Case Objective:
A financial advisor from Texas qualified to make Barron’s Top 100 Financial Advisors list by all metrics, other than the five meritless customer complaints that dotted his record. To make Barron’s lists, an advisor must pass criteria from three major categories of calculations: (1) assets; (2) revenue; and (3) quality of practice. It can be difficult to demonstrate the “quality of practice” data point for financial advisors who have existing negative disclosures.
This advisor sought to expunge all five customer disputes through one arbitration case filed with FINRA’s Dispute Resolution Forum.
Case Summary:
As a testament to the overall lack of validity behind many of the customer complaints listed on FINRA’s BrokerCheck, four of the customer disputes were brought by clients who the advisor had never even met, nor had he provided them with any financial advice. The allegations were lodged against both Merrill Lynch and a different advisor who worked in the same building, as well. Three of the claims had been settled by the firm for tens of thousands of dollars. Each of those settlements, listed on BrokerCheck, made the implication that the advisor not only committed the transgressions listed but also had to pay money to resolve the cases.
The remaining two complaints were both deemed “closed/no action,” as both customers had given up their claims after receiving the initial response from the firm. In both instances, the allegations claimed “unsuitable investments,” at or around the time of the dotcom bubble. Many customer claims of losses from that time were later rescinded.
The question of whether or not the customer dispute disclosures did indeed prove a lack of quality in our advisor’s practice was to be answered by a FINRA arbitration panel.
Result:
When faced with the overwhelming evidence in this case, the FINRA Arbitration Panel recommended that all references to each of the five occurrences be expunged from the advisor’s CRD.
Pursuant to Rule 13805 of the Code, the Arbitrator found that the first four complaints were not even associated with the financial advisor in question. The Arbitrator found that the fifth complaint met the criteria of FINRA Rule 2080 and that the claim itself was false and/or clearly erroneous. The last instance involved a customer with an aggressive risk tolerance. The advisor made appropriate recommendations, the trading account was non-discretionary, and the customer authorized all trades. The allegations as a whole were deemed to have no merit.
Luckily, the advisor, in this case, jumped at the chance to prove that these disclosures had not tarnished the elite quality of service that he provides, and Harris Freedman, J.D., did a fantastic job defending the advisor’s integrity and ensuring that the record was set straight.
Over four decades, this advisor has built his business to become one of the top players at Merrill Lynch. Expungement of the meritless customer complaints from his BrokerCheck profile will allow him to take his place among the preeminent “who’s who” of financial advisors in the United States.
Contact us to discuss AdvisorLaw’s Disclosure Expungement services. The consultation is complimentary, and our services were created exclusively for financial advisors.
- Juris Doctorate from the University of Denver Sturm College of Law
- Master of Business Administration (MBA) with a major in Finance from the Keller Graduate School of Management
- Bachelor of Science in Business Administration (BBA from the University of Minnesota)
- Former FINRA licenses Series 7, 63, and 55 and former L&H license
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