Colorado Advisor’s Perfect Record Restored With Expungement

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Award Date: February 17, 2023
Hearing Site: Cheyenne, Wyoming
Respondent Firm: UBS Financial Services Inc.
Claimant Representative: AdvisorLaw

Case Objective:

A Colorado advisor approaching 20 years in the financial services industry had one, pesky customer dispute that had stained his records for more than half of his career. He reached out to HLBS Law to seek expungement of the disclosure through FINRA Dispute Resolution.

Case Summary:

In 2009, an existing client referred a friend of his to our advisor. The new customer-owned an AXA annuity that she had purchased from a previous advisor several years earlier. The AXA annuity had a death benefit rider, though it did not have any income rider or guarantee. The man who referred the customer-owned an annuity that did have a guaranteed lifetime income rider, and he felt that she could benefit from an annuity with a guaranteed income stream, as well.

Our advisor met with the customer, the man who had referred her, and the customer’s daughter-in-law to discuss the customer’s annuity. Based on her investor profile, our advisor recommended a Section 1035 exchange of the AXA annuity for a new annuity that provided a guaranteed lifetime income benefit rider, as well as a non-reducing death benefit. The new annuity offered the highest level of guaranteed lifetime income available in a variable annuity for an investor such as the customer.

She purchased the new annuity and completed and signed all required documentation. Per firm policy, our advisor did not receive a commission on the sale. The advisor and customer spoke on a regular basis for the next three years, and the customer received the guaranteed income from the annuity.

At one point, the customer began to correspond with her previous advisor who had sold her the AXA annuity. It appeared that that advisor encouraged the customer to lodge a formal claim against our advisor and his firm. The customer then claimed that she had not known that exchanging the AXA annuity meant giving up its death benefit — despite the fact that she had acknowledged that in both conversations and writing and she had a death benefit with her new annuity contract. The customer’s claim was reported to our advisor’s records, alleging that the new annuity hadn’t provided the customer with income and that her signatures had been forged. She sought $35,000 in damages, and the firm settled with her for $32,600.


The firm responded to the advisor’s statement of claim for FINRA arbitration and did not oppose his expungement request. It did not participate in the hearing, nor did the customer, as she was deceased. The FINRA Arbitrator reviewed the advisor’s records and the settlement agreement, as well as the documents submitted. He listened to the advisor’s testimony and the arguments for expungement presented by AdvisorLaw.

The Arbitrator noted that “The Customer requested that [the advisor] change her annuity so that it would provide her income during her lifetime” and that the advisor “explained that annuities cannot simply be changed and that he could obtain for her a different annuity that would provide her income.” He explained that “All of these transactions were thoroughly explained over multiple meetings, and the Customer signed and initialed the appropriate documents.” The Arbitrator found the customer’s allegations to be factually impossible or clearly erroneous, as “(1) the annuity, as demonstrated from both the testimony and exhibits, did provide [the customer] income during her lifetime and (2) her signatures were witnessed and subsequently authenticated by a handwriting expert.

Interestingly, the Arbitrator also granted expungement on the basis of FINRA Rule 2080(b)(1)(B), which puts forth the standard that expungement is warranted when the advisor was not involved in the alleged sales-practice violation. The Arbitrator cited the fact that there was no sales-practice violation of forgery in support of his decision.

With the sole dispute wiped from his records, this advisor can move forward with perfectly clean public BrokerCheck and CRD records.

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Expungement Award