*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: September 25, 2023
Claimant Representative: Kathleen Patchel, J.D. and Dochtor Kennedy, J.D., MBA
Respondent Firm: SII Investments, Inc.
Case Objective:
This financial advisor out of Illinois had one termination disclosure on his records over a 35-year career in the industry. Seeking to move forward free of the negative mark, he hired AdvisorLaw to seek expungement of the disclosure through FINRA Dispute Resolution.
Case Summary:
The advisor joined SII Investments in 1996. Between 2006 and 2008, he left and joined another firm, and then he rejoined SII again in 2008. Seven years into his second stint with the firm, the advisor reviewed the accounts of numerous clients of his who owned fixed-index annuities with Allianz. The clients had expressed their dissatisfaction with the annuities, and they sought better investment options.
The advisor found that there were annuities available with Wallander Financial, which offered superior performance and better options than his clients’ Allianz fixed-index annuities. So the advisor met with each of the clients and explained their options. Because all of the clients’ Allianz annuities were within their surrender periods, the advisor explained that contingent deferred sales charges (CDSCs) would apply to the Allianz annuity surrenders. That fact notwithstanding, the advisor recommended Section 1035 exchanges of the Allianz annuities for new Wallander annuities.
The clients agreed with the recommendations, and they all completed and signed disclosure documents, affirming their knowledge of the CDSCs. None of the clients expressed any dissatisfaction with the CDSCs, nor did any complaints about the recommendation to exchange their annuities.
Around mid-2016, the advisor began making preparations to transition to a new firm. In early September, he notified SII that he was resigning. Despite the fact that he was never informed of any investigation or allegations against him, SII filed a Form U5, alleging that the advisor had been permitted to resign following an investigation into the suitability of surrender recommendations made to customers who had incurred CDSCs.
Result:
The FINRA Arbitrator reviewed all documents submitted at the hearing and listened to arguments in favor of expungement, as presented by Kathleen Patchel, J.D. and Dochtor Kennedy, J.D., MBA, as well as testimony by the advisor.
Determining the allegations on the advisor’s Form U5 to be misleading, the Arbitrator recommended expungement of the Reason for Termination and Termination Explanation from the advisor’s Form U5. He directed that the Reason for Termination be changed to “Voluntary” and recommended expungement of all references to the termination occurrence from the registration records maintained by the CRD.
With the misleading termination allegations and disclosure soon to disappear from his records, this advisor will be able to move on in his career free of the negative mark.