New York Advisor Celebrates 25-Year-Career With Newly Clean Records

Award Date: August 1, 2024
Claimant Representatives: Peter Lindholm, J.D. and Owen Harnett, J.D., HLBS Law
Respondent Firm: Ameriprise Financial Services, Inc. 

Case Objective:

A New York-based financial advisor approaching 25 years in the industry had three customer dispute disclosures on his records. Hoping to enter his 25^th year with a clear record, he hired HLBS Law to guide him through FINRA’s expungement process.

Summary:

The first customer dispute on the advisor’s records had been lodged in 2003 after a customer alleged that he had failed to provide suitable advice, follow instructions, and accurately represent a long-term-care (LTC) policy replacement. The customer had wanted to roll over an IRA to an account with Ameriprise. The home office experienced a glitch with the rollover, which was successfully remedied. The advisor then recommended a LTC policy that would reduce the customer’s expenses, which the customer purchased. The advisor made a simple mistake in the transaction, which was also remedied. While the customer did not experience any harm, she lodged a claim seeking approximately $6,000 in damages, and the firm settled with her for under $500.

The second claim was lodged in 2005 and closed with no action after a customer alleged that the advisor had caused tax consequences concerning a 401(k) transfer. The customer and his wife wanted to roll over a 401(k) plan to an IRA, and the advisor told them they needed to speak with a tax professional regarding tax consequences. Yet when the couple incurred taxes from the rollover, they complained, and the advisor ended up with a second disclosure.

The final disclosure was not lodged until early 2020 after a customer alleged that the advisor had sold shares of Apple stock, without authorization. The advisor had recommended Apple stock to the customer, who had purchased it in 2009. The stock dramatically increased in value over approximately the next ten years. Around late 2019, the customer directed a partial liquidation of his Apple stock position. Soon after that, Apple released a positive earnings report, and the customer wanted to reverse the sale. When the advisor informed the customer that that was not possible, the customer became aggressive, and the advisor consulted with compliance. The result was a denied customer dispute landing on the advisor’s records.

Resolution:

Ameriprise participated in the advisor’s expungement hearing and did not oppose his request for expungement. The customers did not participate. The FINRA Arbitrator listened to Peter Lindholm, J.D. and Owen Harnett, J.D. of HLBS Law make their arguments in favor of expungement. The Arbitrator reviewed the documents submitted and listened to the advisor’s testimony, as well. 

Regarding the 2003 dispute, the Arbitrator found the allegations to be false and erroneous and that the advisor’s conduct was in accordance with FINRA’s suitability standard. Specifically, the Arbitrator noted that “There is no evidence of any failure to follow instructions” and that “the dispute appears to have arisen out of the Customer’s dissatisfaction with the [firm’s] handling of the [customer’s] IRA and the [advisor’s] handling of the [long-term-care policy,] both of which were clerical errors which were later corrected.”

When determining his recommendation for the 2005 disclosure, the Arbitrator acknowledged that the advisor had “informed the Customer that he was not a tax professional” and “advised the Customer to consult a tax professional or the IRS regarding the tax implications of the transfer.” The Arbitrator concluded that “There is no evidence that [the advisor had] engaged in any wrongful conduct or caused any tax consequences” for the customer. 

Regarding the 2020 dispute, the Arbitrator simply noted that “The Customer authorized all trades, and [the advisor] did not conduct any unauthorized trading.” 

The Arbitrator recommended the expungement of all three disclosures just before the advisor reached the 25^th anniversary of his start in the industry. 

If you have a meritless disclosure on your record, contact the AdvisorLaw team today for a complimentary review of your case.