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The client contends that registered rep did not clearly communicate the time horizon of the investment. Arbitration allegations are Negligence, breach of fiduciary duty, violation of California corporations code and financial elder abuse.
1/23/2015
Customer Dispute
Settled
Allegations
Plaintiff filed a lawsuit in January 2015 against Julie Reyes and three other defendants. Plaintiff alleged that the defendants worked together to solicit and sell an Indexed Universal Life Insurance policy in a packaged premium financed insurance transaction for estate planning purposes in July 2013. Plaintiff alleged that the policy and premium finance transaction was misrepresented, unsuitable, and that the defendants' representations and proposed strategy was erroneous or misleading.
Damage Amount Requested
$2,200,000.00
Settlement Amount
$650,000.00
Broker Comment
The plaintiff in this case was a high-net worth investment-advisory client of Reyes Financial Architecture (RFA), a registered investment advisor. RFA was responsible for managing a portion of the client's assets. We include insurance solutions as part of our estate planning when appropriate. I worked with two other agents and an insurance company to present and solicit an Indexed Universal Life Insurance policy in a packaged premium financed insurance transaction for estate planning purposes in July 2013. I acted in the capacity of an agent licensed with the California Department of Insurance. To avoid the expense of further litigation and without admitting any guilt or wrongdoing, I agreed to settle the claim against me for $137,500. At the time of the settlement, I received and followed the advice of a former compliance consultant of Reyes Financial Architecture that the complaint and settlement did not need to be disclosed on my U4. I had previously disclosed this to insurance companies that I am appointed with to transact business. Several years later, after hiring a new compliance firm, I discussed the complaint and settlement with the consultant, learned that the event must be disclosed on my U4, and promptly made this disclosure.
1/19/2015
Customer Dispute
Settled
Allegations
Claimant filed an arbitration in January 2015 against Julie Reyes and four other respondents. Claimant alleged that he became an investment-advisory customer of Julie Reyes and two other Respondents ("the IA Respondents") in July 2012. Claimant alleged that the IA Respondents had discretionary authority over three of Claimant's accounts and that, between December 2012 and April 2014, they engaged in unsuitable short-term trading of speculative stocks in those accounts. Claimant asserted claims against Respondents for breach of fiduciary duty, violation of California Securities Act of 1968, fraud and deceit, constructive deceit, churning, negligence, negligent misrepresentation, breach of contract and violation of California Civil Code Section 3372. The IA Respondents denied any liability in the action and settled the claim without any admission of liability in the amount of $75,000.
Damage Amount Requested
$1,144,686.00
Settlement Amount
$75,000.00
Broker Comment
The claimant in this arbitration was a sophisticated high net worth investor and an investment advisory client of Reyes Financial Architecture (RFA), a registered investment advisor. RFA was responsible for managing a portion of the client's assets. When the portfolio suffered approximately $150,000 (less than 5%) of losses, the client filed an arbitration claim against Trade PMR, First Clearing, RFA, me and David Reyes. To avoid the expense of further litigation and without admitting any guilt or wrongdoing, RFA, David Reyes and I agreed to settle all claims for $75,000. At the time of settlement, I received and followed the advice of counsel and/or a former compliance consultant that the arbitration and settlement did not need to be disclosed. Several years later, after hiring a new compliance firm, I discussed the arbitration and settlement with the new consultant where I then learned that the event must be disclosed on my U4 and promptly made this disclosure.
Disclosures can be customer complaints or arbitrations, regulatory actions, employment terminations, bankruptcy filings and certain civil or criminal proceedings that they were a part of.
Disclosures can be customer complaints or arbitrations, regulatory actions, employment terminations, bankruptcy filings and certain civil or criminal proceedings that they were a part of.