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Award Date: June 2, 2022
Hearing Site: Phoenix, Arizona
Respondent Firm: Wells Fargo Clearing Services, LLC
Attorneys: Harris Freedman, J.D., and Dochtor Kennedy, MBA, J.D.
Case Objective:
A Phoenix-based advisor with over 15 years in the industry sought to expunge the only customer dispute on his records — a claim of unsuitability regarding a 2011 recommendation that had been settled for about $45K in 2016. He hired AdvisorLaw to bring the matter through FINRA Dispute Resolution.
Case Summary:
The advisor inherited accounts belonging to a couple from their previous advisor at the end of 2009. The customers sought growth and income with moderate risk tolerance and already had a portfolio of investments in place. Over the next couple of years, the advisor met with the couple to review their portfolio, and they authorized all trading that took place therein.
In April 2011, in order to maximize the portfolio’s flexibility and gain cost-effective exposure to stocks, bonds, mutual funds, and ETFs, the advisor recommended moving the couple’s account to the firm’s advisory-based brokerage platform. The advisor explained all of the details to the couple and reviewed the asset advisor agreement with them. They established the account, completing and signing all subscription and disclosure documents, after reviewing all of the written materials.
The advisor then spoke regularly with the couple about their portfolio’s performance over the next few months. When market volatility caused the value of their advisory account to decline around August 2011, the couple ceased all communication with the advisor. Then, in February 2012, they lodged a claim of unsuitability. The firm settled with the couple as a business decision and did not require a contribution from the advisor.
Result:
The customers did not participate in the expungement hearing, and the firm did not oppose expungement. The FINRA Arbitrator listened to the facts presented by Harris Freedman, J.D. and Dochtor Kennedy, MBA, J.D., and the advisor’s testimony. He reviewed the documents submitted, as well.
The Arbitrator determined that the customers’ “goals, objectives, and risk tolerance were ascertained after meetings with [the advisor].” He saw that “[t]he investments were diverse and suitable for these goals,” and that, “[a]fter only eight to ten months, the Customers complained as the investments went down in value due to market conditions.” Pointing out that “the Customers had signed off on the agreement and indicated that they understood the risks inherent in these investments, which met their moderate growth objective,” the Arbitrator found the claims made by the couple to be false and recommended expungement.
In the near future, the advisor will have a public record with zero customer dispute disclosures, thanks to the help of AdvisorLaw.
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.