- Rising Tide: The Urgent Call For Advisor Succession Planning
- Why RIAs Should Consider Outsourced Chief Compliance Officers
- FINRA Crackdown — Outside Business Activities
- Georgia Advisor Restores Public Record With Termination Expungement
- Is FINRA’s small firm governor election process truly fair and transparent?
*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: December 15, 2022
Hearing Site: Boca Raton, Florida
Respondent Firm: National Securities Corporation
Claimant Representative: AdvisorLaw
A 20-year industry veteran in Florida had a spotless public BrokerCheck record — until he was slapped with a customer dispute disclosure in 2019. The dispute alleged a breach of fiduciary duty and negligence and was settled by the firm for $45,000. Seeking to restore his perfect public record, the advisor hired HLBS Law to represent him in FINRA Dispute Resolution.
The investor had become a customer of this advisor about a decade before lodging the claim. The investor had a high net worth and sought income and capital appreciation from his investments with the advisor. He owned preferred stocks, non-traded REITs, and a fixed-indexed annuity.
In late 2016, the advisor recommended an investment in GPB Automotive, LLC (GPB). All risks and disclosures were provided to the investor, as were all details of the investment — including the potential for illiquidity. The investor made three, separate purchases of the GPB investment, and he signed documents attesting to his knowledge of all details and risks each time he made an investment. In total, the GPB investments constituted less than six percent of the investor’s liquid assets.
Within two years of the investor’s third GPB investment, GPB began to experience issues that rendered the investments illiquid. Despite the fact that the investor was well aware of that risk, he filed for FINRA arbitration, and the firm settled with the investor. While the advisor wasn’t named in the investor’s filing or required to contribute to the settlement, he still received a disclosure of the settled dispute on his records.
The firm submitted a statement of answer in the matter and participated in the hearing, but it did not oppose the advisor’s expungement request. The customer did not participate or submit any documents indicating his stance on the matter. FINRA’s Arbitrator reviewed the settlement materials, the documents and exhibits submitted, and the advisor’s records. He also listened to the advisor’s testimony and AdvisorLaw’s hearing arguments.
The Arbitrator noted that the advisor “credibly testified as to the suitability of the subject investment, including the Customer’s sophistication, needs, investment objectives, and risk tolerances, as well as the Customer’s understanding of the investment.” He specifically pointed out that the advisor “testified that he fully explained to the Customer the details and risks associated with the investment, including the potential illiquidity,” and that the “Customer not only made an initial investment but followed it with two (2) additional purchases of the same investment over a two (2) year period.” Finding the evidence to support the advisor’s testimony, and acknowledging that the investor remains a customer of the advisor today, the Arbitrator recommended expungement.
With another win for AdvisorLaw, this advisor’s perfect public records will soon be restored.
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.
- FINRA Crackdown — Outside Business Activities - September 7, 2023
- Georgia Advisor Restores Public Record With Termination Expungement - September 5, 2023
- Is FINRA’s small firm governor election process truly fair and transparent? - August 29, 2023