- Navigating Financial Advisory Transitions: A Comprehensive Guide
- Regulatory Shift? The Supreme Court Challenges SEC’s Authority
- FINRA Arbitrator Grants Expungement Of 2011 Customer Dispute For Illinois Advisor
- E-Signatures: From Convenience To Compliance Minefield
- Tucson Advisor Granted Expungement Of Disputes — One Dating Back To 1994
*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: August 15, 2022
Hearing Site: Milwaukee, Wisconsin
Respondent Firm: A.G. Edwards & Sons, Inc., and Wells Fargo Clearing Services, LLC
Claimant Representative: Doc Kennedy, MBA, J.D.
Case Objective:
A Wisconsin advisor who has been in the industry since 1996 had two customer disputes on his record — one of which dated back to ’98. Both disclosures included allegations of investment losses, and one had been settled for $23,000. The advisor went to AdvisorLaw for help-seeking expungement through FINRA Dispute Resolution.
Case Summary:
The first dispute arose from customers who had become clients of the advisor around 1997. They wanted to trade aggressively in the stock market. Our advisor made recommendations for a diversified and balanced portfolio, which included shares of stock in Primark – a fast-fashion retailer headquartered in Dublin, Ireland. A.G. Edwards’s research department had recommended Primark stock because of its positive performance and speculation that Primark would be acquired in a merger. The customers purchased Primark stock with about ten percent of their portfolio. The following year, the price of Primark stock declined, the customers liquidated the stock, and they sought damages of $23,000 in losses that they claimed resulted from the recommendation to purchase Primark. A.G. Edwards made a business decision to settle the claim for $17,000, and the advisor was not required to contribute.
The second dispute was lodged by customers who were clients of our advisor’s partner when the partnership was formed in 2014. The customers owned a portfolio of income-paying stocks that included stocks in oil and gas with high dividends and a high degree of risk. Our advisor had no involvement with the recommendations or the customers’ purchases of those stocks. In fact, our advisor only met the customers on one occasion. When oil prices declined drastically in November of 2014, the customers’ oil and gas stocks decreased in value. The customers were very upset, and they lodged a claim alleging that a failure to diversify had led to investment losses. While Wells Fargo denied the claim, and despite our advisor’s lack of involvement with the customers, he received another disclosure on his records.
Result:
At the FINRA Dispute Resolution hearing, both firms participated, and neither opposed the advisor’s request for expungement. One of the customers who had lodged the first claim participated and did oppose the advisor’s expungement request. The Arbitrator reviewed the documents submitted, which included the settlement agreement for the first dispute. He listened to testimony by the advisor and the customer, in addition to the arguments presented by Dochtor Kennedy, MBA, J.D.
The Arbitrator found that the advisor’s and customer’s testimony “demonstrated that the [first] claim or allegation was false, in that the suggested investment would not have produced a complaint if the investment would not have gone down in value.” He noted that “the [c]ustomer agreed to the investment” and that, “had the [c]ustomer not abandoned the position, the investment would have gone up in value.” He found that the “claim [was] both erroneous in that the investment was authorized and there was no substantiated wrong committed by [the advisor].”
Regarding the second claim, the Arbitrator found those allegations to be erroneous, as well. He pointed out that our advisor “was not the primary advisor on the account and had no involvement in recommending the investment position.” Additionally, he noted that our advisor had “actually recommended that the customers diversify, which was part of the complaint,” and so in regard to our advisor, “the claim against him was false.”
As these two disputes were the only disclosures on our advisor’s otherwise-flawless record, he will soon have a perfectly clean record for the first time in nearly 25 years.
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.