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A 30-year veteran of the financial services industry sought FINRA expungement of three customer disputes, two of which we settled, dating back to 2003.
The first customer dispute arose after the advisor had discussed the possibility of liquidating a drug company stock that a customer-owned. The customer had elected to hold the stock. But when unexpected issues arose in clinical trials, and the stock price tanked, the customer alleged that the advisor had failed to follow his instruction to liquidate the stock. The customer sought over $60,000 in damages, and the firm quickly denied the bogus claim.
A second customer with a long-term investment time horizon claimed that the advisor had failed to pay attention to his account after his stocks declined in the volatile markets of the early 2000s. The customer filed for arbitration, seeking over $40,000 in damages. The firm settled with the customer for less than a quarter of the amount sought.
A third customer also filed for arbitration after incurring surrender charges for taking substantial withdrawals from his deceased mother’s annuity. The advisor had worked very closely with the customer’s mother and always acted in her best interest. The son believed that the declines in the market at that time were attributable to the advisor, and he sought more than $20,000 in damages. The firm settled for about half of that amount, and the disclosure has been on the advisor’s record ever since.
At the FINRA arbitration hearing, Erika Binnix, J.D. and Dochtor Kennedy, MBA, J.D. were able to show the Arbitrator that the claims were false and clearly erroneous. The Arbitrator noted that the first claim had been settled “to preserve the relationship” and “not for any reason associated with the merits of [the customer’s] complaint.” He pointed out that the advisor had worked closely with the customer and that he had been very attentive to the account. In the award, the Arbitrator specifically mentioned that, while the securities may have lost money, “that does not define wrongdoing.” Regarding the second complaint, the Arbitrator mentioned that the advisor had “spent considerable time with [the customer…] and tried to sway [him] away from aggressive to very aggressive investments.” The advisor and customer had chosen to hold the investments to remain consistent with the customer’s long-term investment time horizon. The drug company’s stock did not decline due to the actions of the advisor. The advisor and customer had had several discussions about the stock in question, and the customer had not directed the advisor to liquidate it.
The FINRA Arbitrator also pointed out that the customer received “at least two monthly statements thereafter which showed the securities had not been sold.” The Arbitrator found that the customer in the third complaint had never complained. Rather, her son had complained, because he wanted to take money from his mother’s annuity, which would generate a surrender penalty. The customer had been advised of the surrender penalty, and the remainder of the declines were “due to market loss.”
All three claims were found to be false and erroneous by the Arbitrator, and expungement was recommended. This advisor may now wipe his public records clean of the three meritless claims.
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