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Award Date: May 1, 2023
Respondent Firm: Advanced Equities, Inc.
Claimant Representative: Doc Kennedy, MBA, J.D.
Case Objective:
This Chicago-based advisor’s career spans more than 35 years, and he had a perfect record, aside from one settled dispute from 2014. He wanted to take his shot at expunging the disclosure while he still could — so he hired AdvisorLaw to take him through FINRA Dispute Resolution.
Case Summary:
In 2011, an investor became a client of another financial advisor with the same firm. The investor was never a client of our advisor at any point. Our advisor never spoke to the investor, nor did he make any recommendations for the investor. Our advisor was President and Chief Operating Officer with the firm at that time, and his roles did not require or prescribe his supervision of any representatives with the firm. The other advisor determined the investor’s profile and objectives. He was a sophisticated investor with significant investment experience. The other advisor recommended a preferred stock and explained the details of the stock to the investor. The investor purchased the stock on three separate occasions, for a total investment of over $300,000. With each purchase, the investor signed the subscription agreement for the stock.
In September 2012, the SEC charged the firm with misleading investors in relation to different investments and imposed sanctions against certain individuals with the firm. Our advisor was not one of them, and he was never contacted or investigated. In 2014, the investor filed for FINRA arbitration, naming every financial advisor with the firm who had a Series 24 license, including our advisor. He sought $450,000 in damages, and the firm settled the claim for a mere $10,000. Nevertheless, our advisor ended up with a settled dispute disclosure on his otherwise-perfect public BrokerCheck record, reflecting all kinds of serious allegations.
Result:
Neither the firm nor the customer participated in our advisor’s expungement hearing. The FINRA Arbitrator reviewed our advisor’s Statement of Claim, the settlement agreement, and the other documents submitted. He listened to Doc Kennedy, J.D., MBA make his arguments in favor of expungement, on behalf of our advisor. After considering the evidence presented, the Arbitrator determined that our advisor was entitled to expungement. He stated that the claim was factually impossible or clearly erroneous, “in that according to the uncontradicted sworn testimony of [our advisor], [he] never had any contact with the Customer and the Customer was not a client of [his] at any time.” The Arbitrator went on to point out that “The uncontradicted testimony of [our advisor] further stated that [he] did not supervise the sales practices of the registered representatives of Respondent firm.” He concluded by affirming that “The inclusion of this claim on [our advisor’s] BrokerCheck® Report provides no public protection and has no regulatory value and is detrimental to the reputation of [the advisor,] who has no other customer complaints on his BrokerCheck® report.” After nearly a decade of living with a misleading mark on his public record, our advisor can once again enjoy perfect records, reflective of his longstanding career in the industry.