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Award Date: December 17, 2021
Hearing Site: Las Vegas, Nevada
Respondent Firm: Lucia Securities, LLC
Claimant Representative: AdvisorLaw
Case Objective:
This advisor had two customer disputes on his public records — both of which went to arbitration and were settled. The disputes were lodged in 2019, and the allegations in each dispute included breach of fiduciary duty, unsuitability, misrepresentation, negligence, and more. In an effort to clear his records of disclosures, the advisor hired AdvisorLaw.
Case Summary:
The first customer dispute arose after a ten-year relationship with a customer who invested in annuities and alternative investments. The recommended investments were suitable for the customer, and all proper disclosures were provided. The customer referred her son to our advisor, and the son requested the same investments that his mother owned. After years of strong and profitable investment performance and substantial withdrawals made by the customers, the son directed the liquidation of the family’s investments, as he was dissatisfied with the temporary performance of his alternative investments. The family filed for FINRA arbitration, and the firm settled the claim for $175,000.
The second dispute also involved alternative investments. The customers had purchased alternative investments and owned them for five years with no issues. However, when the stock market declined dramatically in December 2018, the investments declined in value and lost liquidity. Despite the fact that the customers had received annualized returns of more than six percent from their portfolios with the advisor, the customers filed for FINRA arbitration and claimed damages of over $200,000. The firm settled with the customers for approximately one-quarter of the damages sought.
Result:
In a hearing before FINRA Dispute Resolution, AdvisorLaw illustrated to the Arbitrator that the claims were meritless and argued that they should both be expunged from the advisor’s record. Neither the firm nor the customers participated in the hearing. The Arbitrator reviewed the documents submitted, including both settlement agreements, and listened to the advisor’s testimony.
The Arbitrator determined that the customers’ account returns had been positive, and the investments were suitable. He noted that the customers had not expressed any dissatisfaction with the advisor and that they had all “had regular communications with [the advisor] and [were] fully aware of the risks and potential rewards of each issue.” Finally, the Arbitrator noted that the concentration of the investments was “at the request of the [c]ustomers, and he recommended expungement.”
Our advisor will soon have a profile with zero disclosures and be able to boast a perfect public record.
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