Texas Advisor Clears Records With Successful Expungements In FINRA Arbitration

• Two-for-One Expungement Win: A Texas financial advisor successfully expunged two separate customer disputes from his FINRA CRD and BrokerCheck records in a single arbitration.
• False and Erroneous Allegations: The FINRA arbitration panel found both disputes, which involved Wells Fargo Clearing Services, LLC and Osaic FS, Inc., to be "factually impossible or clearly erroneous."
• Restored Professional Record: The expungement order removes misleading claims of misrepresentation, unauthorized trading, and unsuitable recommendations, restoring the advisor's clean professional reputation.
• Expert Legal Representation: The case was led by Dochtor Kennedy, MBA, J.D., of AdvisorLaw, who presented extensive evidence to prove the baseless nature of the claims.
• FINRA Rule 2080: This case serves as a successful example of using FINRA Rule 2080 to clear inaccurate disclosures that lack regulatory value and could mislead potential clients.

Over nearly 25 years in the industry, this Texas-based financial advisor (FA) acquired two customer disputes on his Central Registration Depository (CRD) and public BrokerCheck® records. The disputes arose from baseless allegations of misrepresentation and unauthorized trading by one client and unsuitable investment recommendations by another, and they damaged the FA’s professional reputation. With the help of AdvisorLaw, the FA pursued expungement through FINRA Dispute Resolution to clear the misleading entries from his records.

A financial professional since 2001, the FA was registered with Wells Fargo Clearing Services, LLC from January 2008, to September 2009, and with Osaic FS, Inc. from September 2009, to August 2017. 

In 2002, a woman became a client of the FA at A.G. Edwards. Her portfolio was managed by a semi-retired colleague of the FA, who held discretionary authority. The customer was approximately 65 years old. Her annual income was $150,000, she had a moderate-to-aggressive risk tolerance and a 15-year investment horizon. The colleague purchased auction rate securities (ARSs) for the customer’s portfolio, which constituted 7–10% of her holdings and provided over 5% income. The FA fully disclosed the risks, including potential illiquidity. In 2008, after the FA had transitioned to Wells Fargo, ARS auctions failed industry-wide, rendering the customer’s ARSs temporarily illiquid. The customer alleged misrepresentation, claiming that the FA had presented ARSs as equivalent to money market funds with no risk, as well as unauthorized purchases. Wells Fargo repurchased the customer’s ARSs at par value in August 2008, per FINRA Regulatory Notice 09-12. The claim was reported as “Settled” on the FA’s CRD and BrokerCheck® records.

In 2003, an accredited investor became the FA’s client at A.G. Edwards. Her $11 million portfolio included stocks, bonds, annuities, and real estate investment trusts (REITs). In 2010 and 2014, the investor purchased Atlas Resource Partners, L.P. (1.8% of her portfolio) and Atlas Growth Partners, L.P. (2.7% of her portfolio), respectively, after the FA thoroughly explained the investments’ terms and risks. Both investments were approved by Osaic and supported by signed disclosure documents. In 2015, energy market volatility caused these investments to decline by over 95%. In 2021, the Atlas Growth REIT reported significant financial risks. In 2023, the investor filed a FINRA arbitration claim, alleging that the FA had recommended unsuitable, non-conventional investments and seeking $125,000. Osaic settled the claim for $125,000 in October 2023 as a business decision, without the FA’s contribution. The dispute was reported on the FA’s CRD and BrokerCheck® records.

The FA filed a Statement of Claim with FINRA Dispute Resolution in October 2024, asserting that both disputes were “false” and “clearly erroneous” under FINRA Rule 2080(b)(1)(A) and (C). The expungement hearing was conducted via videoconference on July 21, 2025, with AdvisorLaw’s Dochtor Kennedy, MBA, J.D. presenting extensive evidence, including client interaction records, trade confirmations, and the FA’s testimony that the Customers understood the nature of the securities, the liquidity, and acceptance of the risks regarding the securities in question, as well as that the securities in question never exceeded 10% of the customers’ portfolios. Neither Wells Fargo nor Osaic opposed the expungement, and the customers did not appear at the hearing. Settlement agreements for both occurrences could not be located after a good-faith search, and the FA confirmed that he had not participated in or contributed to either settlement.

After reviewing the testimony and evidence, the arbitration Panel determined that the claims were “factually impossible or clearly erroneous.” The Panel found that the FA had accurately represented the ARSs to the customer and that all of her trades had been authorized by the colleague, with no financial loss. The Panel confirmed the suitability of the investor’s investments at the time of purchase, noting that subsequent market declines did not render them unsuitable. The Panel concluded that both disputes lacked regulatory value and could mislead viewers of the FA’s records.

On July 21, 2025, the Panel awarded expungement of both disputes from the FA’s CRD and BrokerCheck® records — restoring his professional standing. 

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.