Advisor Granted Expungement Of Disclosures Over Ten Years Old

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Award Date: November 24, 2021
Hearing Site: Columbus, Ohio
Respondent Firm: Pruco Securities, LLC
Claimant Representative: Dochtor Kennedy, MBA, J.D., and Harris Freedman, J.D.

Case Objective:

For the past 11 years, an advisor in Ohio had two publicly-disclosed customer disputes — one which had been tainting his records for all but 2 of his 17 years in the industry. He sought the help of AdvisorLaw to seek expungement of the disclosures through FINRA Dispute Resolution.

Case Summary:

The two customer disputes were lodged four years apart, and both pertained to allegations of misrepresentation regarding annuities. One claim pertained to the disclosure of tax consequences, and the other pertained to surrender charges. The presence of two claims with similar allegations on the advisor’s records gave more credence to the allegations, regardless of their merit, and the fact that one of the claims was settled worsened the claims’ impact upon the advisor.

The 2010 claim centered around the disclosure of tax consequences when a Section 1031 exchange was executed improperly by another representative whom the advisor was coaching at the time. The advisor made no representations to that customer, and he never discussed taxes with the customer.

The 2006 claim involved the first annuity sale that the advisor made in his career, which he did with the assistance of his manager. The customer was concerned about the surrender charges of an older annuity that was to be exchanged. The advisor suggested that she write a letter to him expressing her concerns, and the letter was then interpreted as a complaint by the firm.


During the FINRA arbitration hearing, Dochtor Kennedy J.D., MBA, and Harris Freedman, J.D., presented compelling arguments to illustrate the false and clearly erroneous nature of the disclosures.

The Arbitrator noted that the advisor gave no tax advice to the first customer, and he was not listed as the rep on the documents that the customer signed. Additionally, the advisor was not involved with and did not contribute to the settlement. Therefore, the advisor determined that “the claim was false regarding the accusation that [the advisor] misrepresented and failed to disclose the tax consequences” in the annuity purchase at issue.

The award written by the Arbitrator in regard to the second disclosure mentions the fact that “[t]he evidence clearly shows that there would be a 4.0% surrender charge and that the [c]ustomer also received a 4.0% bonus payment to offset the surrender charge.” Additionally, the Arbitrator noted that a document “clearly states and was signed by the [c]ustomer that she reviewed the comparison and understood the disclosures.”

Based on the evidence and testimony, the Arbitrator recommended the expungement of both disclosures from the CRD. The advisor may now reap the benefits of having a flawless record as he completes his second decade in the industry.

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Expungement Award