Successful Expungement of All Customer Dispute Disclosures

One of our senior attorneys, Chelsea Bauer handled a case that started in January of 2022 and came to an end this November of 2023. The financial advisor (client) came to HLBS Law to get several customer complaints expunged from his CRD, BrokerCheck, IARD, and IAPD records. This was not an easy task, however Ms. Bauer took on this case and discovered that many of these customer disputes occurred in the 2008 market crisis, some not intended to be placed on record, some withdrawn, and so on. 

Case One (3 Customer Disputes): 

The client’s first case was to expunge 3 customer dispute disclosures that were reported between 2015-2018. The first customer dispute in this case arose because the 2008 market crisis led to some unforeseeable impacts to the customer’s portfolio. The customer was very sophisticated and had been fully informed of all the terms/risks of his investments. The customer was poached by another advisor who coached this customer on how to file a complaint against our client. His investment firm closed this complaint without taking any action, but it was still reported to his CRD, BrokerCheck, IARD, and IAPD records. The second customer dispute in this case arose because a customer experienced an unforeseeable loss in an equity fund (while still maintaining an overall profit in his portfolio). This was another very sophisticated investor who had been fully informed of all the terms/risks, in which the customer withdrew his complaint against our client. Still, the complaint was reported to his CRD, BrokerCheck, IARD, and IAPD records. 

The third customer dispute in this case arose because the customer experienced losses in a REIT that had been liquidated. Our client had informed her that the REIT was having some issues, but the customer still chose not to make any changes to her investments. Nevertheless, the customer maintained an overall profit in her portfolio. However, the customer eventually filed a complaint against our client. She later withdrew the complaint against our client, but once more the complaint was still reported to his CRD, BrokerCheck, IARD, and IAPD records. Expungement was successful in this matter and all three disclosures were removed.

Case Two:

His second case was to expunge 1 U5 termination entry from his records that was reported in 2017. The underlying customer complained about certain aspects of her portfolio to our client, and he reported the complaint to all the proper parties, including the parent company of his new firm. However, the new firm made the decision to permit our client to resign and alleged that he had not properly reported the complaint to them. Ms. Bauer and the client filed an arbitration action against the firm to seek the expungement of this disclosure and they were successful in having the termination entry expunged from his registration records.

Case Three (4 Customer Disputes):

His third case was to expunge 4 customer dispute disclosures that were reported between 2014-2016. The first and second customer disputes were from a husband and wife who experienced some losses as a result of the 2008 market crisis. They were sophisticated investors who had numerous meetings with our client regarding the terms and risks of their investments. They remained his clients even after the crisis occurred. They eventually complained to his investment firm, in theory to obtain a payoff as many investors did after the market crash, and the firm settled with them as a business decision to avoid the costs of litigation. 

The third customer dispute was a relative of this husband and wife who, in theory, only submitted a complaint in order to benefit in the same way her sister and sister’s husband had. She had been fully informed of the terms and risks of all of her investments and worked closely with our client, even after the market crash, until eventually submitting her complaint and obtaining a similar settlement as the other couple. The fourth customer dispute was another example of intra-industry competition where the investor was poached by another advisor and coached to submit a complaint about our client. This was a sophisticated investor who was fully informed of the terms and risks of her investments. Further, the company paid the customer all of her money back with interest in order to settle any potential claims and avoid the costs of litigation. An arbitration action was filed to seek the expungement of these disclosures and we were successful in having the disclosures expunged from his records.

In total, all 8 disclosures were expunged, leaving our client with a completely clean record.