- Navigating Financial Advisory Transitions: A Comprehensive Guide
- Regulatory Shift? The Supreme Court Challenges SEC’s Authority
- FINRA Arbitrator Grants Expungement Of 2011 Customer Dispute For Illinois Advisor
- E-Signatures: From Convenience To Compliance Minefield
- Tucson Advisor Granted Expungement Of Disputes — One Dating Back To 1994
*If you’re under FINRA or SEC investigation, or if you have a meritless disclosure on your BrokerCheck, CRD, IARD, or IAPD record, call us right now at (303) 952-4025 to talk with an attorney and receive a priority consultation at no charge.
Award Date: April 5, 2024
Claimant Representatives: Dochtor Kennedy, MBA, J.D. and Harris Freedman, J.D.
Respondent Firm: Citigroup Global Markets Inc. and RBC Capital Markets, LLC
Case Objective:
A 38-year industry veteran in Tucson had two disclosures on his CRD and public BrokerCheck records. One was lodged by a customer in 2016, and the other dated back to 1994. Seeking to move forward with clear records for the first time in 30 years, the advisor hired AdvisorLaw to bring him through the FINRA Dispute Resolution expungement process.
Summary:
In 1994, a couple who were customers of the advisor alleged unauthorized trading and unauthorized use of margin. Though the advisor did not contribute to the settlement, Citigroup settled with the couple for approximately $15,000, and the disclosure sat on the advisor’s records for three decades.
In 2016, a customer of the advisor lodged a dispute that subsequently evolved into FINRA arbitration. She alleged that her accounts had been concentrated in unsuitable energy-sector investments, between 2010 and 2015, and she sought more than $245,000 in damages. Ultimately, RBC settled with the customer for $85,000. While the advisor was not required nor asked to contribute to the settlement, he still ended up with a second customer dispute disclosure on his records.
Result:
Neither Citigroup nor RBC objected to the advisor’s expungement request, and none of the customers participated in the expungement hearing. The FINRA Arbitrator reviewed the pleadings and exhibits, and he listened to the advisor’s testimony and arguments in favor of expungement presented by AdvisorLaw’s Dochtor Kennedy, MBA, J.D. and Harris Freedman, J.D.
The Arbitrator determined that the allegations in the 1994 complaint were false, “because all trades were authorized.” The customers had “received confirmations of all trades after verbally authorizing them, and notices of the trades were sent to them.” Further, the Arbitrator pointed out that the customers “were sophisticated investors and were aware of all trades made on their behalf.” Additionally, they had “signed papers authorizing [the use of margin.]”
Concerning the second claim, the Arbitrator first noted that the customer “was a seasoned trader[,] and her account, when inherited by [the advisor], contained energy related investments.” He pointed out that, “After assessing [the customer’s] current needs and positions, [the advisor] sought to keep her in balanced, conservative investments that would bring her income and increase in value” and that, “As [she] still had energy investments in her portfolio, energy was clearly an investment she had agreed to earlier, and she again authorized investing in other energy securities.” The Arbitrator noted that the customer’s energy investments were “a small part of her overall investments” and that she had filed her complaint only “After the price per barrel of petroleum dropped in 2014 and 2015[.]” Furthermore, the customer “ignored the income she was deriving from her portfolio and focused on energy prices,” and “The time to measure the appropriateness of the energy stock was when she authorized the purchase, not five years later.”
The Arbitrator concluded his award, mentioning that the advisor “has been in the securities business for over 40 years and these two complaints are the only he has ever had.” Wrapping up with the fact that the advisor hadn’t been required to contribute to either settlement, and there would be no danger to the public if the complaints were expunged, the Arbitrator recommended the expungements of both disputes — clearing the advisor’s records and restoring his reputation in the process.