FINRA Expungement Award:

Denied, VUL-Related Complaint Expunged After A Decade Of Disclosure

FINRA Expungement Award:

Denied, VUL-Related Complaint Expunged After A Decade Of Disclosure


Award Date: June 7, 2021
Hearing Site: Atlanta, Georgia
Respondent Firm: MSI Financial Services, Inc.
Claimant Representative: Michael O'Gara, J.D., Esq., AdvisorLaw, LLC


Case Objective:

A financial industry veteran based in Atlanta wanted to remove a customer complaint regarding a variable universal life (VUL) insurance policy that the customer had kept in place for nearly 25 years.

Even though the firm denied the initial complaint, the disclosure had remained on the advisor’s record for the past decade. Although it wasn’t a nuisance at the outset, the disclosure continued to create confusion among prospective customers due to the ubiquity of FINRA’s BrokerCheck site.

This dual broker and IAR reached out to AdvisorLaw to help remove the meritless allegations and demonstrate to all current and future customers that she runs a clean business.


Case Summary:

In the late 1980s, the customer held a life insurance policy valued at a mere $10,000. Interested in purchasing additional insurance, the customer sought help from our advisor. . He had a conservative risk tolerance and a long-term investment time horizon.

The advisor recommended a diversified investment portfolio that included a VUL. Because VULs can be subject to market volatility, the advisor recommended allocating the funds in the policy to a fixed subaccount with a guaranteed, 4% interest rate to remain in line with the customer’s conservative risk tolerance. The advisor thoroughly explained the VUL to the customer and provided him with the VUL’s written materials.

The customer purchased the VUL in 1988 and met regularly with the advisor until she changed firms in 1993. For 24 years, the policy remained protected from market fluctuation and increased in value.

It was not until 2012 that the advisor received notice that the customer had made a complaint about the nearly 25-year-old policy, claiming that he had been unaware that the policy was a VUL. The firm conducted a thorough investigation, found the claim to be without merit, and denied it. The customer sought no further claims on the matter.


Result:

After considering the evidence and testimony, the Arbitration Panel recommended that the complaint be expunged, per FINRA Rule 2080, as it found the allegations to be factually impossible or clearly erroneous and false.

The Panel based its findings on the fact that the financial advisor had suited the customer’s needs and offered multiple investment options. The VUL had been explained to the customer, he signed written illustrations of how the policy worked, he signed the VUL contract, and he had even been allotted a ten-day, free-look period.

After a decade of false information being published on BrokerCheck, this advisor was afforded expungement of the customer complaint through FINRA arbitration.




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