Customer Carries 31 Year Old Grudge Into Broker Expungement Case

December 11, 2019

Some folks carry grudges. Some folks will get a wheelbarrow or pick-up truck to carry a grudge. No matter the time. No matter the weight. In a recent FINRA expungement arbitration, we come across a public customer who is still in a lather about a 1988 investment for which she paid $5,300. Ask her, she says that she only got $1,600 back in distributions. Ask the broker seeking expungement, and he says she got at least $6,272. It's the difference between a loss or a profit. It may explain why the customer opposed the requested expungement and even showed up with counsel at the hearing.

Case In Point

In a FINRA Arbitration Statement of Claim filed in April 2019, associated person Claimant Pickler sought the expungement from his industry record of an unsettled, denied customer complaint. Respondent UBS did not oppose the expungement and participated in the hearing. The customer opposed the expungement and participated with counsel at the hearing. In the Matter of the Arbitration Between David Anthony Pickler, Claimant, v. UBS Financial Services Inc. Respondent (FINRA Arbitration Decision 19-00985)

https://www.finra.org/sites/default/files/aao_documents/19-00985.pdf

The sole FINRA Arbitrator recommended expungement after making a FINRA Rule 2080 finding that the customer's claim, allegation, or information is factually impossible or clearly erroneous, and false. The Arbitrator offered the following rationale:

In the Underlying Complaint filed on April 20, 2000, the Customer alleged that a limited partnership bought in 1988 was unsuitable. Her reasoning was that she invested $5,300.00 and only received $1,600.00 when she closed the account, which resulted in a loss of $3,700.00.

Claimant testified that the investment was suitable and paid adequate returns over the life of the investment. Claimant introduced evidence illustrating that by 2002, an account distribution of $6,272.00 was made to accounts of this investment. The Customer testified that she never received any of those funds.

Claimant testified that he met the Customer in December 1988, reviewed her investment objectives and advised that this investment was a good one for her. There is evidence and testimony that the Customer was placed in an investment that was suitable.

In February 1994, Claimant left the brokerage firm in the Underlying Complaint ("Underlying Firm") to work for another firm. The Customer did not transfer her account to Claimant's new firm. Claimant was unable to access the Customer's accounts or give her any advice after this move. The Customer did not complain about her account until April 2000. She stated that she waited 12 years hoping that the account would make money. The Customer testified that she did not know that Claimant had moved to another firm, but spoke with other people about the account with no great success. Ultimately, the Underlying Firm investigated and denied the claim. Finally, Respondent advised that the Underlying Complaint was filed prior to its involvement with the Customer, it did not investigate or file the disclosure on Claimant's CRD records and it did not oppose the expungement.

Bill Singer's Comment

Online FINRA BrokerCheck records as of December 11, 2019, disclose that Pickler was first registered in 1984, and had been registered, in part, with:

UBS Financial Services, Inc. March 1994 to March 2005
Smith Barney Shearson Inc. July 1993 to February 1994
Lehman Brothers Inc. May 1988 to July 1993

In addition to one pending 2018 customer complaint, BrokerCheck discloses one other matter (which appears to be the complaint at issue in the expungment proceeding) that was received by Shearson Lehman Brothers on April 20, 2000 and denied on August 31, 2000.

In re-creating the pertinent timeline, we note the following events:

Customer purchased Limited Partnership in 1988 for $5,300

Pickler met customer in December 1988

Pickler left Smith Barney Shearson in February 1994

Customer complaint filed April 20, 2000

By 2002, the LP investnent had purportedly returned $6,272 in distributions.

I'm not quite sure what happened in Pickler -- and I'm particularly puzzled by the whole issue as to whether the customer received the $6,272 in distribution or only $1,600. We're talking about a $3,700 loss or, at best, a $972 profit. Now don't get me wrong, I harbor grudges as well as anyone; and if I thought that I had been jerked around 31 years ago or 41 years ago, hell, I'm going to stew over that until I get compensated. Maybe that's what's going on here.

I'm also wondering whether anyone ever traced down proof of the disputed payments and any attendant withdrawals or transfers-out. After all these years, you'd sort of think that the issue would be amenable to some determination of where the funds went (or didn't); on the other hand, "after all these years," some of the pertinent data may no longer be archived and, for sure, Lehman Brothers and Smith Barney Shearson have long since disappeared.

Perhaps nothing is more striking in this arbitration than the assertion that:

[T]he Customer did not complain about her account until April 2000. She stated that she waited 12 years hoping that the account would make money. The Customer testified that she did not know that Claimant had moved to another firm, but spoke with other people about the account with no great success. . .

Frankly, not the best strategy for either investing or litigation. Investors who believe that they were sold an unsuitable investment need to complain, and to do so promptly. You can't arbitrarily decide to roll the dice for 12 years and, hey, if this pans out in my favor, great, and if not, I'll sue. None of which even remotely justifies unsuitable recommendations; however, it does place some onus on any investor to timely complain. Otherwise, get over it -- let it go!