The customer never asked the stockbroker to sell anything. The stockbroker never had the right to exercise discretion. The customer was market savvy. As best we can tell, everything was okay until it wasn't. Five years go by and, whammo, the customer complains not about what was bought but about what wasn't sold. Sure as hell took a long time for that grievance to bubble up.
Case In Point
In a FINRA Arbitration Statement of Claim filed in September 2019, associated person Claimant Wittpenn sought an expungement of a customer complaint from his Central Registration Depository records ("CRD"). Respondent Credit Suisse Securities did not oppose the requested expungement.In the Matter of the Arbitration Between Glenn Paul Wittpenn, Claimant, v. Credit Suisse Securities (USA) LLC, Respondent (FINRA Arbitration Decision 19-02880)
The customer involved with the underlying complaint was served with notice of the expungement hearing but did not participate and did not oppose the requested relief. Respondent Credit Suisse did not participate or oppose.
The sole FINRA Arbitrator recommended expungement of the cited customer complaint based upon a FINRA Rule 2080 finding that the claim, allegation, or information was factually impossible, clearly erroneou, and false. As set forth in part in the FINRA Arbitration Decision:
It was undisputed that Claimant did not refuse to sell securities for the Customer
since no instructions were ever given. The Customer's accounts were nondiscretionary. He was a very sophisticated investor and never advised the Claimant
to sell any of the securities involved in this transaction. The claim was filed five years
after dealings with the Claimant. At no time did he express dissatisfaction.
I examined the Claimant extensively on the record and was satisfied that he was
candid and did not, nor could he have, done the things alleged in the underlying
matter. No support exists for the Customer's allegations that he should have sold the
instruments in question. Since the account was non-discretionary and the Customer
was a sophisticated investor, only he could have made that decision, not Claimant.
Since the documents at that time only express a positive relationship between the
Claimant and his client, I find the motivation suspicious, particularly for a very
knowledgeable investor who directed all of his own investments.
Bill Singer's Comment
In my opinion, the overwhelming majority of customer complaints are meritorious -- and I"m guessing that the percentage is likely above 80% in the customers' favor. Which is not to say that each and every customer complaint is proof of despicable conduct and fraud by every stockbroker. Sometimes we got a mere misunderstanding. Sometimes, it's miscommunication. Sometimes, it's just one of those things where you think I did something wrong and I don't. As such, not every complaint turns out to be correct and not every cited act of misconduct rises to the level of a tort or crime. Regardless, Wall Street is based upon a commission model, and when the services rendered don't result in a profit, the industry's customers are apt to complain about not getting what they paid for.
Compliments to sole FINRA Arbitrator Roger B. Jacobs for taking the time to write a Decision replete with sufficient content and context. Pointedly, Jacobs explains to us that Claimant Wittpenn "did not refuse to sell" the complaining customer's securities, and the customer had never, ever given such sell instructions. Going further, the arbitrator explains that the accounts at issue were "non-discretionary," so Wittpenn wasn't even in the position where he could have exercised his discretion as the customer's stockbroker and entered the sales. Moreover, Jacobs characterized the customer as a "very sophisticated investor," and one who "never advised the Claimant to sell any of the securities involved in this transaction." On top of all of that, Jacobs noted that the "claim was filed five years after dealings with the Claimant. At no time did he express dissatisfaction." All of which is living proof of the adage that everything is okay until it isn't.