- Big Fines For Bad Records: How The SEC’s Recent Action Affects RIAs
- Financial Advisor Exodus: 2024’s Biggest Trends & Your Strategic Move
- Staying Compliant: Colorado’s 2024 Investment Adviser Examination Priorities
- Demystifying The Maze: Your Guide To RIA Compliance
- Unlock Access To Industry Awards: How Negative Disclosure Expungement Can Propel Your Financial Advisory Career
*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.
More than 25 years into his career in the industry, an advisor from Washington state decided that he wanted to take his chance at clearing his record of the single disclosure that had been tainting it since 2003. So he hired AdvisorLaw to bring him through FINRA’s Dispute Resolution forum.
Our advisor joined the firm in December 1998. In 1999, our advisor and his father became representatives of an insurance company. Our advisor met with his branch manager to discuss the proper procedure for reporting his association with the insurance company as an outside business activity (OBA). Following the branch manager’s instructions, our advisor completed and signed the firm’s standard, fixed-insurance disclosure form for soliciting fixed insurance. The branch manager told our advisor that no further action was necessary.
In March 2000, our advisor sold an annuity sponsored by the insurance company to a customer with the firm. The advisor accurately represented to the customer that her annuity was reinsured by United of Omaha.
In November 2000, our advisor attended a compliance meeting with an emphasis on OBAs and subsequently met with his office of supervisory jurisdiction (OSJ) and a compliance officer to discuss his association with the insurance company. The OSJ told our advisor that he had satisfied his OBA disclosure requirements when he completed the disclosure form.
In June 2002, the U.S. district court entered a judgment against the insurance company, finding it to be a Ponzi scheme. It was discovered that, while our advisor’s customer’s annuity was reinsured by United of Omaha, other annuities sold by the insurance company were not. That October, the SEC filed a complaint against the insurance company.
In April 2003, our advisor was terminated by the firm, for allegedly selling unregistered securities in the form of charitable gift annuities that had been issued by the insurance company. The termination disclosure remained on our advisor’s records for the next two decades.
The FINRA Arbitrator reviewed the documents submitted at the hearing. She also listened to our advisor’s testimony and the arguments in favor of expungement that was presented by Dochtor Kennedy, MBA, J.D. and Harris Freedman, J.D.
The Arbitrator noted that the advisor’s customer “did not lose money on her investment because of United of Omaha’s reinsurance” and that that customer “was the only client of [our advisor’s] to invest in the [insurance company’s] charitable gift annuity.”
After considering the pleadings, testimony, and evidence, the Arbitrator recommended the expungement of the termination disclosure and all references thereto from our advisor’s records.
With the sole disclosure soon to be wiped from his otherwise-perfect records, this advisor can look forward to spending the next part of his career with a public record that accurately reflects his years of excellence in the financial services industry.