- Strategically Selling A Financial Advisory Practice: Your Guide To A Successful Transition
- Dual Registration Dilemma: Navigating FINRA & SEC Regulatory Shifts
- RIA M&A Activity Rebounds: Opportunities & Challenges For Wealth Managers & Advisors
- Navigating Criminal Disclosures On FINRA’s Form U4
- How To Buy A Registered Investment Advisor (RIA) Business
*If you’re under FINRA or SEC investigation, or if you have a meritless disclosure on your BrokerCheck, CRD, IARD, or IAPD record, call us right now at (303) 952-4025 to talk with an attorney and receive a priority consultation at no charge.
Award Date: January 9, 2022
Hearing Site: Boca Raton, Florida
Respondent Firm: JWGenesis Securities, Inc., Wells Fargo Advisors Financial Network, LLC, and National Securities Corporation
Claimant Representative: Harris Freedman, J.D.
Between 1999 and 2021, this 30-plus-year industry veteran accumulated nine customer disputes on his public records, four of which reflected settlements that ranged from $15,000 to nearly $200,000. With FINRA’s sights narrowing on firms employing brokers with multiple disclosures, this advisor decided to try his chance at expunging as many of the claims as possible. He hired AdvisorLaw for his best chance at a win.
Our advisor was registered with the three respondent firms over the course of 20 years. Two brothers who were clients of the advisor with JWGenesis lodged the first two claims on the advisor’s records. The advisor had accurately and fully represented his recommendations, and the brothers had each authorized all of the trades in their accounts. But when their investments declined in value, each brother filed for FINRA arbitration and ended up with a settlement from the firm, while the advisor received two disclosures.
The third, fourth, and fifth claims were lodged by customers who directed investments in high-yield bonds. When one of the bond’s issuing companies filed for bankruptcy, the customers complained. The firm denied the first two claims and settled the third, and the advisor ended up with three, separate disclosures added to his records.
The sixth claim came about when a customer of the advisor’s partner filed for arbitration with the NASD, seeking nearly $700,000 in damages for allegedly-unsuitable, “solicited” transactions. Despite the fact that most of the securities in question had been purchased on an unsolicited basis, and all recommended investments were suitable for the customer’s investor profile, the firm settled with the customer for business reasons, for $190,000. Our advisor was hit with another disclosure.
After a customer’s variable annuity declined in value in 2002, the customer claimed that he had believed that he had been purchasing a fixed annuity and not a variable annuity. The firm denied the allegations, finding that our advisor had fully explained the product to the customer, but our advisor received a seventh disclosure, nonetheless.
The eighth claim was even more ludicrous, as the customers had called in requesting to purchase a variable annuity after listening to a radio show about it. When the annuity declined in value with the markets, the customers lodged a claim alleging that our advisor had made fantastical claims concerning annuities, which had in fact been made on the radio show. The firm had denied the claim less than a month after receiving it.
The ninth and final claim arose after a woman became the advisor’s customer when she inherited the account belonging to a customer who had passed away. A REIT investment purchased by the original account holder was subsequently declined, and the new customer was prospected by an attorney who filed for FINRA arbitration on her behalf. When the customer learned that the advisor had received a complaint on his records, she withdrew the claim. Yet the withdrawn claim remained on the advisor’s records.
None of the customers involved in any of the nine claims became involved or took any issue with the expungement hearing. The firms participated in the FINRA Dispute Resolution hearing and did not oppose the advisor’s expungement request. The Arbitrator reviewed all documents, including settlement agreements. He listened to the advisor’s testimony and arguments by Harris Freedman, J.D.
The Arbitrator determined that the advisor had “made prudent and diversified portfolio suggestions to the Customers.” He pointed out that “An assessment of risks and exposures to risks were provided to the Customers, both by [the advisor] and through supporting documentation, such as monthly account statements, initial prospectus[,] and other similar documentation” and that “Most, if not all, of the [claims] were seemingly related to market timing and pullbacks in the market as a whole.” Reiterating that “As a general rule, brokers are not guarantors of the performance of the securities purchased, nor are they guarantors that the value will increase in the short-term,” the Arbitrator recommended the expungement of every single one of the nine disclosures for which the advisor sought expungement.
Wiping nine customer dispute disclosures spanning 20 years from his records, this advisor restored a perfect public record and protected himself and his firm from FINRA in a single expungement case — thanks to the expertise of AdvisorLaw and HLBS Law.
If you’d like to learn more about AdvisorLaw’s FINRA Disclosure Expungement services, please fill out the contact form below. Our consultations are complimentary, and our services were created exclusively for financial advisors.
- Dual Registration Dilemma: Navigating FINRA & SEC Regulatory Shifts - November 30, 2023
- Navigating Criminal Disclosures On FINRA’s Form U4 - November 16, 2023
- 30-Year Industry Veteran Restores Flawless Records With ARS Dispute Expungement - November 1, 2023