FINRA Expungement Award:

Financial advisor seeks to expunge six customer complaints over 30 years

 

Award Date: May 11, 2021
Hearing Site: Phoenix, Arizona
Respondent Firm: Edward Jones
Claimant Representative: Ben Winograd, J.D. and Dochtor Kennedy, MBA, J.D.; AdvisorLaw, LLC


Case Objective:

A financial advisor who began at Edward Jones nearly 30 years ago had picked up six customer complaints throughout his career. Like many disputes made by investors, all six of the complaints were correlated to the dotcom bubble burst.

Even though the advisor now runs his own successful RIA, he was intent upon clearing his name and controlling the false narrative that FINRA’s BrokerCheck was peddling. Did he incur complaints from one of the largest financial meltdowns in history? Yes. Did he ever commit a sales-practice violation at any time while advising those clients? Absolutely not.

Uncomfortable with what his BrokerCheck profile implied, the advisor hired AdvisorLaw to remove the disclosures from his Form U4 through the expungement process set forth by FINRA’s Dispute Resolution Forum, under FINRA Rule 2080.


Case Summary:

Each of the investors who lodged the six complaints made similar allegations — essentially, they were unhappy that they had temporarily lost money in the market. To most investors, such potential downside is known as “market risk.” Obviously, there are no guarantees in the financial markets. However, many investors who are more than happy when the stocks are flying quickly pivot to requesting a settlement from the firm when the stocks are down.

Due to the precipitous decline of technology stocks in 2000 and the resulting recession, all firms were fielding thousands of complaints from investors at the time. Over the subsequent years, many firms simply cut a settlement check for a portion of the loss to avoid spending hundreds of thousands of dollars litigating the claims.

In this advisor’s case, when confronted with the allegations from each investor, the firm conducted its own internal investigation of the merits of the claims and concluded that it should deny all six of the disputes. Such a response is usually an outlier in the industry, in that it’s almost always easiest to settle for pennies on the dollar. Given the flagrantly baseless nature of these particular claims, the firm decided to reject each claim as having no merit. No financial settlement was ever offered or provided.


Result:

After a FINRA arbitration panel reviewed the evidence of each of the complaints, the Panel found that all six customer dispute disclosures should be expunged, as the allegations were false or clearly erroneous.

Based upon FINRA Rule 2080, the Arbitrator found that the financial advisor had reasonably believed that the tech stocks in question were suitable investments. The investments were all rated as a “strong buy,” and the investors were given no guarantees. Additionally, the Panel found that the customer complaints were primarily due to market fluctuations and not to any alleged failure by the financial advisor. Lastly, all trades were discussed and authorized by the investors themselves.

As an advisor, having six complaints on your CRD record puts you in the bottom one-tenth of a percent of all financial advisors, solely based on the number of disclosures. AdvisorLaw was happy to help our client achieve completely clean BrokerCheck and CRD records. He is now back on a level playing field with the rest of the industry.




Contact us to discuss AdvisorLaw's Disclosure Expungement services. The consultation is complimentary, and our services were created exclusively for financial advisors.