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Award Date: September 30, 2024
Claimant Representatives: Dochtor Kennedy, MBA, J.D. and Peter Lindholm, J.D.
Respondent Firm: Cetera Advisors LLC
Case Objective:
Twenty years into his financial services career, this current investment adviser and former brokerâs perfect records were stained with a settled customer dispute disclosure. In hopes of restoring his once-perfect public record, he hired AdvisorLaw to bring him through the FINRA expungement process.
Summary:
The complainant had become a client of the advisor at the end of 2011. He was seeking diversification. The advisor recommended various investments based on the investorâs profile and explained all the details and risks of the investments to the investor. In 2014, the advisor recommended a real estate investment trust (REIT), which the customer purchased. In doing so, the customer signed subscription and disclosure documents, and he received the offering documents for the REIT. The REIT comprised just over five percent of the customerâs portfolio.
Subsequently, the REITâs value declined as a result of market volatility. The customer was contacted by an attorney who convinced him to file a formal claim. So the customer filed for FINRA arbitration, alleging unsuitability. The customer sought $50,000, and the firm settled with him for $4,500 â without requiring a contribution from the advisor.
Resolution:
In the FINRA Dispute Resolution hearing, the Arbitrator reviewed the evidence submitted. She also listened to Dochtor Kennedy, MBA, J.D., and Peter Lindholm, J.D. present their arguments on behalf of the advisor, as well as to the advisorâs testimony.
The Arbitrator determined that âAt the time of the recommendation, the [REIT] was consistent with the Customerâs risk tolerance and investment objectives[,]â as âThe Customer was looking for diversification in alternative strategies.â She also mentioned that âThe assets performed well, and the Customer made money for many years with no complaints to [the advisor]â and that âThe Customer left [the advisor] on friendly terms and three years later, elected to file an arbitration claim.â
The Arbitrator determined that the claim, allegation, or information was false, and she recommended the expungement of the one disclosure on this advisorâs otherwise perfect records.