Texas Advisor Clears BrokerCheck of Unsuitable Claim

• Case Outcome: A three-arbitrator FINRA panel unanimously granted the expungement of a 2021 customer dispute from a Honolulu-based advisor's record, restoring a 17-year unblemished career.
• Legal Finding: The Panel ruled the allegations were "false" under FINRA Rule 2080(b)(1)(C).
• The Allegation: The 2021 claim alleged unsuitable recommendations related to a private placement fund (GPB Capital Holdings II, LP) that was later revealed to be a $1.7 billion issuer-level fraud.
• Key Evidence: The customer involved provided a sworn affidavit supporting expungement, admitting the allegation was a "false disclosure" and acknowledging the investment was suitable for her profile at the time of purchase.
• Arbitration Ruling: The Panel found the advisor had no involvement in the issuer fraud and that the investment represented only 4% of a client’s portfolio, aligning perfectly with her aggressive risk tolerance and 10-year horizon.

With 16 years’ experience in the industry, this financial advisor (FA) in Austin, Texas faced a single, unwarranted disclosure on his BrokerCheck® and CRD profiles from a 2020 client complaint alleging unsuitable alternative investments. No settlement had occurred. The FA sought AdvisorLaw’s help seeking expungement through AAA to restore his clean record reflecting his commitment to suitability standards. 

The FA joined First Allied Securities (later LPL-affiliated) in April 2015. In October 2015, a client of his attended his social security seminar and expressed interest in illiquid investments. Assessments of the client’s investor profile showed an aggressive risk tolerance and an investment time horizon of less than ten years. Her portfolio held only equities. With his co-advisor, the FA recommended diversified alternatives: $50K NorthStar Healthcare REIT; $46K Griffin Fund; $50K Watermark Fund; $50K FS Global Fund; $75K TriLinc Fund; $50K Carlyle Fund; plus ARC Hospitality Trust, Jackson Annuity, and ETFs. The client signed disclosures confirming her understanding of all risks and fees. 

The FA held regular reviews with the client throughout 2015 to 2016. Her attitude shifted after a 2016 Edelman Financial Engines article warned against non-traded REITs, and the COVID-19 losses in 2020, especially in NorthStar, prompted her February 2024 complaint alleging unsuitability. 

The case was heard by a sole AAA Arbitrator via videoconference on September 12, 2025.

The Arbitrator reviewed the evidence and determined the customer's claim to be factually impossible or clearly erroneous and false, based on the documentation presented. The decision specifically found that:

• The FA's "conduct, at all times, was in accordance with the standards of FINRA Rule 2111."
• There was a "reasonable basis to believe that the [ ] Investments were suitable" at the time they were made, supported by the client’s signed agreements and risk profile.
• The diminution in value was due to market factors (like COVID-19) and did not affect the suitability determination at the time of the recommendation.

Deemed baseless, the complaint was ordered removed from the CRD, IARD, IAPD, and BrokerCheck, affirming the financial advisor’s professional integrity.

Facing a similar situation? Contact our team today for a complimentary consultation to evaluate your case. Our experts will assess the viability of expungement and guide you through the process.