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Award Date: January 14, 2022
Hearing Site: Columbus, Ohio
Respondent Firm: FSC Securities Corporation
Claimant Representative: Dochtor Kennedy, MBA, J.D.
Case Objective:
An advisor in Ohio had a perfect public record, aside from a sole customer dispute. The claim had been denied by the Ohio Department of Insurance, yet it plagued the advisor’s record for nearly a decade. In an effort to restore his record, the advisor hired AdvisorLaw to seek expungement through FINRA Dispute Resolution.
Case Summary:
Our advisor partnered with another advisor when he joined the firm in 2005. A few years later, a customer who had worked with the partner for more than 15 years sought guaranteed income for life. The partner recommended annuities, and our advisor and the partner evaluated various annuities to find one that best suited the customer. The annuity chosen had an income benefit rider that would allow the customer to take income from the annuity for the rest of his life, regardless of the underlying investments’ performance. As the advisory team did not practice annuitizing variable annuities, they did not discuss annuitization with the customer, and they never advised the customer to select a specified period income option.
The customer purchased the recommended annuity in 2008 after receiving all written materials, being explained all details pertaining to the annuity and the rider, and signing all required documentation. Due to the financial crisis of 2008, the annuity declined. Through his own research, the customer found that the annuity offered a specified period income annuitization option, which would result in a 20-year, fixed payout of income. The advisory team advised the customer against utilizing that option, as the annuity had the potential to provide income for much longer than 20 years. Instead, the advisory team recommended exercising the annuity’s rider and taking income that way.
Over the following four years, the customer consistently expressed confusion with the annuity’s terms and options, as well as his general dissatisfaction with the product. Then, in 2012, the customer complained to the Ohio Department of Insurance that he had been misinformed about an annuitization option associated with his annuity contract. Despite the fact that the claim was denied, our advisor ended up with a customer dispute on his public records.
Upon receiving the advisor’s Statement of Claim for the FINRA expungement hearing, the firm submitted a Statement of Answer, in which it expressed its non-opposition to the expungement request. The customer submitted a letter objecting to many of the assertions in the Statement of Claim, yet he also mentioned that his issue primarily lied with the partner, rather than our advisor.
Result:
Dochtor Kennedy, J.D., MBA presented exhibits and arguments during the FINRA hearing on the matter, and the advisor testified on his own behalf. The Arbitrator reviewed the firm’s response and the customer’s letter, as well. Ultimately, the Arbitrator determined that the customer’s claim against our advisor was clearly erroneous and false because it did not “directly involve” the advisor.
The Arbitrator noted that the Ohio Department of Insurance had dismissed the claim as being baseless and stated that “[i]t clearly appeared that [the advisor] had not committed any misrepresentations, and at all times properly explained the product to the [c]ustomer.” The Arbitrator also noted that it had been the partner who was the principal salesperson, as well.
Our advisor won, and the Arbitrator recommended the expungement of the claim from his records. Soon, the advisor will once again have spotless BrokerCheck and CRD profiles.
If you’d like to learn more about AdvisorLaw’s Disclosure Expungement services, please fill out the contact form below. Our consultations are complimentary, and our services were created exclusively for financial advisors.
- Juris Doctorate from the University of Denver Sturm College of Law
- Master of Business Administration (MBA) with a major in Finance from the Keller Graduate School of Management
- Bachelor of Science in Business Administration (BBA from the University of Minnesota)
- Former FINRA licenses Series 7, 63, and 55 and former L&H license
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