Texas Advisor Removes Sole Customer Dispute At FINRA Arbitration

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Award Date: October 20, 2023
Claimant Representative: Dochtor Kennedy, MBA, J.D. and Kathleen Patchel, J.D.
Respondent Firm: UBS Financial Services Inc.

Case Objective: 

This advisor from the Dallas, Texas area has been in the industry for 19 years. He had excellent CRD and public BrokerCheck records, until June 2020 when he received a customer dispute disclosure with a substantial settlement amount. The advisor decided to take advantage of the FINRA Dispute Resolution process’s more lenient structure before its new rule change went into effect, and he hired AdvisorLaw to guide him.

Case Summary:

Around 2016, the advisor inherited an account from another advisor who was departing the firm. The account belonged to a high-net-worth couple in their late 40s and early 50s. 

The advisor managed the customers’ portfolios in a discretionary account under UBS’s portfolio management program. In a conversation with the customers around the fall of 2017, the advisor briefly mentioned UBS’s “YES” strategy. The YES strategy utilized a portfolio managed by a separate group of UBS advisors. It was an options overlay strategy that used customers’ existing portfolios as collateral for the strategy. The advisor did not recommend the YES strategy to the customers — he just briefly described it. Yet when the customers expressed an interest in the strategy, the advisor directed the customers to the YES strategy managers, or the “YES Group.” 

The Yes Group explained the strategy to the customers and confirmed that the customers met the suitability criteria required to enroll in the strategy. The customers enrolled in the YES strategy, and they completed and signed all required documents. They affirmed their understanding of the strategy, as well. 

While our advisor was not involved with the management of the YES portfolio, nor did he discuss it with the customers, he did arrange for several phone calls between the customers and the YES Group. 

Over the next few years, the customers’ portfolio that was managed by the advisor performed well, and they had no complaints about the advisor. However, their YES portfolio performed poorly during that time and rapidly declined in value. The customers expressed to our advisor that they were dissatisfied with the YES portfolio, and they proposed splitting their losses with UBS. 

In June 2020, the customers’ complaint was reported to our advisor’s records, alleging unsuitability and misrepresentation regarding the YES strategy. UBS settled with the customers for over $300,000.


Neither UBS nor the customers participated in the advisor’s expungement hearing. The FINRA Arbitrator reviewed the settlement documentation, as well as all documents submitted by the advisor and AdvisorLaw. The advisor testified, and Dochtor Kennedy, MBA, J.D., and Kathleen Patchel, J.D. offered their arguments in support of the expungement of the disclosure.

The Arbitrator penned her award in favor of expungement, stating that the advisor had “established that he did not solicit the investment for the Customers, and that he was not involved in explaining any risks[.]” She went on to mention that the advisor had “provided appropriate due diligence for the core portfolio he managed, he disclosed he was not an options advisor, and all discussions were processed through other advisors.” Importantly, she mentioned that the advisor “was not involved in [determining] the alleged suitability of this investment [nor] in the direct discussions with the Customers as to the investment in question.” Finally, she indicated that the advisor was not accused of any wrongdoing and did not contribute to the settlement. 

With this customer dispute soon to be rightfully omitted from the advisor’s records, he may enter his 20th year in the industry with customer dispute-free records.

If you have a meritless, false, or completely erroneous disclosure on your record, please contact us today for a complimentary consultation.

Expungement Award