FINRA Expungement Award:

FINRA Customer Dispute Expungement Restores San Jose Advisor’s Perfect Public Record



FINRA Expungement Award:

FINRA Customer Dispute Expungement Restores San Jose Advisor’s Perfect Public Record


 

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Award Date: March 30, 2022
Hearing Site: San Francisco, California
Respondent Firm: Morgan Stanley
Claimant Representative: Ariel Okonsky, J.D.


Case Objective:

In 2017, 30 years into his financial services career, a San Jose-based advisor’s perfect public record was stained with a customer dispute alleging misrepresentation among other sales-practice violations pertaining to a variable annuity surrender. After four years of living with the disclosure, the advisor sought the help of AdvisorLaw to seek expungement through FINRA’s arbitration process.


Case Summary:

The advisor was at a restaurant in 2017 when he ran into a family friend, who inquired about becoming a client. The friend owned multiple annuities that she had previously purchased through her credit union.

Morgan Stanley had a policy at the time that prohibited its customers from holding more than 35% of their assets in annuities. The advisor explained to the friend that she would need to surrender some of her annuities in order to become a client. As the annuities had been purchased elsewhere, the advisor did not have the information needed to determine the amount of surrender fees that the friend would incur. He explained that she would incur some fees and that he could not estimate what they would be.



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When the friend surrendered some of her annuities, she incurred $20,000 in fees and expressed her dissatisfaction to the advisor. The advisor contacted the annuity company and was able to get them to agree to reverse the transaction within 60 days of the surrender. However, the customer decided against doing so.

She then returned to the credit union, where she was encouraged to file a complaint. The advisor was hit with a customer dispute alleging misrepresentation, inter alia, regarding the surrender of variable annuities. The firm investigated and denied the claim, yet it remained on the advisor’s records for nearly five years.


Result:

The customer did not attend the advisor’s expungement hearing. Morgan Stanley did participate in the hearing and did not oppose the expungement request. After reviewing the advisor’s statement of claim and BrokerCheck report, listening to testimony by the advisor, and hearing the arguments presented by Ariel Okonsky, J.D., the Arbitrator determined that the allegations and claims were false. He stated that “Evidence was presented at the hearing that supports a finding that [the advisor] made full and accurate representations to the [friend] regarding the subject transaction” and that the advisor “performed his duties as the [ ] representative in a thorough, ethical, and professional manner.” Expungement of the claim was recommended, and the advisor’s perfect public record will soon be restored.




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