The associated person, Gregory Jay Chebuske ("Claimant"), requests expungement of a U-4 disclosure concerning a November 11, 2002 customer complaint alleging that Claimant: (i) ". . . intentionally gave bad advice to receive commissions, (ii) 'disregarded her instructions to buy some mutual funds and sell others in a timely manner in 1998 and 1999', (iii) 'failed to execute sell instructions on certain tech stocks', and (iv) 'would not surrender a life insurance policy as requested." According to the U4, the customer sought damages in the amount of $31,365.00 without making a demand for arbitration. The Claimant denied the allegations, and the Respondent settled the matter without a contribution from Claimant in the requested amount.. . .Claimant has been a licensed registered representative since March 23, 1995 pursuant to the Series 6, 7, 24, 63, 66, and SIE examinations; and had worked for Respondent for six years before resigning in 2001 to join, SII Investments, Inc. . .
According to Claimant, he met the customer in 1998 at a seminar on the use of life insurance in estate planning, and she became a client sometime thereafter. Subsequently, he met with her and her estate planning attorney several times in connection with the purchase of life insurance as an element of a trust naming her daughter-in-law as a beneficiary. The customer, who was in her mid-to late 60's at the time, also established a brokerage account that she actively managed. The Claimant left the Respondent's employ in 2001, but was later contacted by the customer for advice. She informed him that she had suffered some personal setbacks. The customer stated she no longer wanted the life insurance policy and desired a return of the premium to cover some investment losses she had incurred from the 2001 market downturn. Claimant credibly testified that he informed her that he no was no longer employed by Respondent and therefore had no ability to assist her. It is unclear what the surrender terms were for the policy, however, Claimant said he suggested some language the customer might use in a letter to possibly get the funds returned. Claimant stated he considered the customer a friend and had no idea she would use this information against him until he received a telephone call from Respondent indicating that the customer had made a complaint. Claimant stated he promptly consulted with a Compliance Officer of his then current employer (SII, Investments) who advised him to ignore the Respondent's call. In his naivete, the Claimant followed the Compliance Officer's advice without realizing that the complaint would adversely affect his career. However, when the customer called him again in 2003 or 2004 to ask about long term care insurance, he declined to assist her.
Claimant's counsel requested all relevant information including the customer's complaint and the Settlement Agreement from Metlife. However, on or about August 21, 2018, Metlife informed Claimant's counsel that they were unable to locate any responsive documentation from its document storage vendor (Iron Mountain). Metlife never filed an Answer to the Claim, and ceased its participation in this matter without further notice to Claimant or FINRA.
[I]n light of the fact that we lack the Respondent's records to contradict Claimant's credible testimony; and the fact that the customer is deceased and unable to corroborate or refute the CRD disclosure . . . the undersigned relies on the testimony, papers, and documented market influences around the time of the customer's alleged complaint.Ordinarily, a customer's Statement of Claim would provide some explanation of what acts, omissions or violations of securities laws the Financial Advisor is alleged to have committed. There was no Statement of Claim, no complaint letter, or a Settlement Agreement between the customer and Respondent. But more remarkably, there is no written evidence showing how Claimant was made aware of the alleged acts or omissions he allegedly committed, and nothing documenting that he had a fair opportunity to defend himself against the claim(s). All we know, from the CRD disclosure, is Claimant did not contribute to the alleged settlement amount.However, the undersigned is baffled by Respondent's alleged inability to retrieve basicinformation regarding the complaint and settlement, especially given the effect theyknew, or should have known, it would have on an associated person's CRD. Indeed, the primary purpose of retaining a data and records storage company is to easily retrieve important records. Metlife's cavalier response vis-a-vis its failure to locate and produce even the most basic information related to the customer's alleged complaint is troubling. Therefore, following the general rule of law, and lacking evidence to the contrary, the undersigned finds that an adverse inference can be drawn against Respondent for failing to produce documents supporting the customer allegations they reported.
Nevertheless, Claimant's pleadings are supported by his credible testimony. Given that Claimant met the customer at a seminar on the value of making life insurance an element in estate planning; he met several times with her estate planning attorney; the customer applied, and was approved for a life insurance policy. In addition, there is no evidence whatsoever that he made an unsuitable recommendation. Accordingly, the undersigned can reasonably conclude that the customer's allegation that Claimant made an unsuitable investment recommendation was false. Moreover, the fact that Claimant was no longer employed by Respondent at the time the customer alleged that he refused to surrender her life insurance policy renders the claim erroneous on its face. There is no basis for a finding that Claimant violated the Rules by failing to perform a customer request he could not possibly undertake. In other words, the element of the customer's complaint that Claimant failed to surrender the life insurance policy is factually impossible.