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Award Date: May 14th, 2021
Hearing Site: Denver, CO
Respondent Firm: First Allied Securities, Inc
Claimant Representative: AdvisorLaw, LLC
Case Objective:
Recently, AdvisorLaw successfully helped a local securities broker, who has been in the business since the 1980s, expunge two customer disputes. Already sold on the value of cleaning up his BrokerCheck record, the advisor soon called AdvisorLaw again to remove two remaining meritless complaints that had been plaguing his reputation. He sought the removal of the disclosures through FINRA arbitration, citing Rule 2080 and arguing that the disputes were false and/or erroneous.
Case Summary:
The first of the two complaints involved a situation that we run into quite often at AdvisorLaw. Investors complained about capital gains taxes that they were required to pay on monetary gains in their accounts. Allegations that an advisor did not comment on the tax effect of an investment are common. What makes this complaint particularly erroneous is that the investors were a husband and wife who might have known more than the average investor. One of them had previously worked for a mutual fund company. The otherâŚwas an accountant!
The almost-laughable allegations were indeed denied by the firm. Yet due to FINRAâs draconian rules of disclosure, the obviously-meritless complaint was published on the advisorâs BrokerCheck profile, where it stayed for nearly 20 years.
The second customer dispute involved yet another fact pattern that AdvisorLaw runs into regularly. The underlying complaint was lodged by an older woman who stated that her annuity was unsuitable about two years after purchasing the product. As annuities can be a hot-button topic in the industry, the firm completed a thorough investigation of the allegations. When the firm called the customer, it reiterated the fact that her annuity had indeed earned 6% per year, and her âguaranteed valueâ was still intact. It turned out that the woman was simply mistaken. She ended up keeping the annuity with no further issues or complaints.
That simple and common error on the part of the customer resulted in a full-blown customer dispute disclosure on the advisorâs BrokerCheck profile, which is available to all prospective clients. Both complaints were listed as âdeniedâ on BrokerCheck, but any red marks can be detrimental when trying to build a successful business.
Result:
A FINRA arbitration panel reviewed the evidence of each of the complaints through FINRAâs dispute resolution forum. The Panel found that both complaints should be expunged under FINRA Rule 2080.
Typically, an arbitration panel will use the same boilerplate language when expunging customer disputes. In the first claim, the Panel went a step further by declaring that â[t]he customers were wrong,â that the advisor âcommitted no wrongful act,â and that the allegations were âwrong and clearly erroneous.â For the second claim, the Panel stated that Claimant âdid no wrongâ and determined that the complaint was âclearly erroneous and wrong.â The Panel stated that â[b]oth complaints should be expungedâ and that the advisor âcorrectly handled both matters.â
In this case, not only was the official record set straight, but decades of frustration with the meritless allegations were finally settled, once and for all.
Contact us to discuss AdvisorLaw’s Disclosure Expungement services. The consultation is complimentary, and our services were created exclusively for financial advisors.