- Strategically Selling A Financial Advisory Practice: Your Guide To A Successful Transition
- Dual Registration Dilemma: Navigating FINRA & SEC Regulatory Shifts
- RIA M&A Activity Rebounds: Opportunities & Challenges For Wealth Managers & Advisors
- Navigating Criminal Disclosures On FINRA’s Form U4
- How To Buy A Registered Investment Advisor (RIA) Business
*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.
Twenty-four years into his career, a New Jersey-based investment adviser representative and the former broker had no customer disputes on his public records — until August 2020, when he received a disclosure relating to a settled customer claim. The IAR reached out to AdvisorLaw to help him seek expungement through FINRA’s Dispute Resolution.
In early 2013, when our advisor was a dually-registered broker and IAR with LPL, a high-net-worth couple became his clients through a referral. The couple sought diversification and investments that were not correlated with the stock market. The husband held an advanced degree in finance and worked as an executive with a pharmaceutical company, and the wife was a medical writer who owned her own business. The couple had recently increased their net worth, and the husband expected to soon receive a promotion with more company stock options. The wife managed the couple’s investment portfolio, which was comprised entirely of equities. She saw no value in holding corporate or investment-grade government bonds.
Based on the couple’s investor profile and objectives, our advisor recommended several investments, including three real estate investment trusts (REITs) and an energy and power fund. He thoroughly explained the investments and their risks, and the couple received and reviewed all applicable offering documents.
In January 2013, the husband purchased two of the recommended REITs and the recommended fund. In May and June of 2013, the wife purchased two of the recommended REITs. The couple signed numerous documents affirming their understanding of the investments and their risks. The couple’s REIT and fund investments constituted approximately 20% of their portfolio, which also included fee-based wrap accounts containing individual stocks, ETFs, and mutual funds.
Between the dates of the purchases and July 2014, the couple received regular distributions from their REIT investments. Four of the five investments purchased resulted in profits for the couple. In January 2018, our advisor left the firm and transferred his registration to Securities America, Inc. Two and a half years later, in July 2020, the couple filed for FINRA arbitration. While they did not name our advisor in their claim, he received a disclosure alleging that he had made misleading recommendations of unsuitable investments in non-traded REITs and other alternative investments. LPL settled with the customers for $10,000.
Both the firm and the customers participated in the FINRA expungement hearing on the matter. While the firm did not oppose our advisor’s request for expungement, the customers did assert their opinions in opposition to our advisor’s expungement request. The FINRA Arbitrator reviewed the documents submitted, including our advisor’s statement and records and the customers’ written statement, as well as the settlement agreement with the customers. She listened to our advisor’s testimony and attorney arguments, as put forth by AdvisorLaw’s Dochtor Kennedy, MBA, J.D. and Harris Freedman, J.D.
The Arbitrator determined that “[t]he five investments [at issue] when made, were appropriate and fit the investors’ profiles.” She pointed out that the “[c]ustomers filled out and signed documents which stated that they understood that the investments were long-term, illiquid, and [had] no guarantee of profit,” as well as the fact that, “in four of the five investments[, ] the [c]ustomers made a profit.” Regarding the settlement amount of $10,000, the Arbitrator noted that the amount was “much less than the expenses that would be incurred if the matter went to a hearing.” The Arbitrator concluded that our advisor “did not misrepresent the investments at issue,” and thus, “[t]o have this occurrence reported on [his] BrokerCheck Report does not provide any meaningful information to the investing public.”
With AdvisorLaw’s help, the successful expungement of the disclosure will leave our advisor with zero customer disputes on his public records, once again.
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.
- Dual Registration Dilemma: Navigating FINRA & SEC Regulatory Shifts - November 30, 2023
- Navigating Criminal Disclosures On FINRA’s Form U4 - November 16, 2023
- 30-Year Industry Veteran Restores Flawless Records With ARS Dispute Expungement - November 1, 2023