There's a lot of anti-consumer misconduct on Wall Street that's tolerated and even promoted as a way to get around rules and to make a quicker buck. All of which prompts losses in customers' accounts, which then creates angry customers, who file complaints. No . . . I ain't gonna pretend that many, if not most, customer complaints aren't justified. On the other hand, there are many instances when a stockbroker is victimized by unwarranted customer complaints. Unfortunately, Wall Street has constructed an unfair system by which men and women who seek to clear their names are forced to pony up a sizable bankroll just to get the process going and then have to invest further time and money to see it to fruition.
In today's BrokeAndBroker.com Blog we focus on a stockbroker who did nothing wrong, should have his industry record expunged of what is independently determined to be a false customer complaint, but is daunted by the price-tag and the delays inherent in that endeavor. Equally troubling, we consider how the Financial Industry Regulatory Authority seems to have developed a lucrative business predicated upon the misfortunes of its associated persons.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in May 2017, Raymond James Financial Services, Inc. Claimant Adams asserted inaccurate reporting on his Central Registration Depository record ("CRD") in connection with a customer complaint concerning an annuity purchase. In the Matter of the FINRA Arbitration Between David Wayne Adams, Claimant, vs. Raymond James Financial Services, Inc., Respondent (FINRA Arbitration 17-01391, December 26, 2017).
Respondent Raymond James did not oppose Claimant's request for expungement and did not participate further in the case. The FINRA Arbitration Decision asserts that the customer had been provided with a copy of Claimant's Statement of Claim seeking expungement and notice of the hearing date but that the customer did not participate in the hearing or contest the sought relief.
The FINRA Arbitration Panel noted that the customer never filed a formal Statement of Claim in pursuit of his complaint, which was denied by Raymond James, and that no settlement of any claims occurred.
The FINRA Arbitration Panel made a Rule 2080 finding that the customer's claim was false based upon the following:
Bill Singer's Comment
The record reflects that the customer filed the same complaint against the associated person Claimant on three separate occasions. The first complaint was filed in 2008 during the height of the financial crisis, with Respondent and another broker dealer. The allegations were (1) that the variable-rate annuity in which the customer had invested (on the advice of Claimant) was unsuitable, and (2) that Claimant had misinformed the customer about the nature of the rider to the annuity the customer purchased. This complaint was investigated by both Respondent and the other broker dealer and was found to be without merit and denied.
The same complaint was again filed in 2012 with Respondent. The complaint was investigated and was again found to be without merit. The customer then filed the same complaint with the Tennessee Department of Commerce in October 2012, who investigated the complaint and found it to be without merit. To date, the customer has taken no further action on this matter.
The evidence indicates that the customer decided on his own and without consulting with Claimant to make an unwise withdrawal from the annuity that adversely affected the growth guarantee on his funds.
The Panel notes that the customer never filed a civil action or arbitration complaint on these claims. The Panel finds that the totality of the evidence supports the conclusion that these claims were false, unsupported and without merit and that the CRD of Claimant should be expunged.
1. The Panel recommends the expungement of all references to Occurrence Number 1438633 from registration records maintained by the CRD for Claimant Adams (CRD# 4767570), with the understanding that, pursuant to Notice to Members 04-16, Claimant Adams must obtain confirmation from a court of competent jurisdiction before the CRD will execute the expungement directive.Unless specifically waived in writing by FINRA, parties seeking judicial confirmation of an arbitration award containing expungement relief must name FINRA as an additional party and serve FINRA with all appropriate documents.
- FINRA Rule 2080: Obtaining Customer Dispute Expungement
- FINRA Rule 2081: Prohibited Conditions Relating to Expungement of Customer Dispute
- FINRA Rules 12805 and 13805: Expunging Customer-Dispute Information Under Rule 2080