Seeking Information on Filing a Formal Complaint

One place to start is with the compliance officer at the brokerage. This person is responsible for making sure that everyone in the brokerage follows the law does things properly.

-john-

Are you after money? Or are you hoping the next customer of this firm does not have the same experience you had? Or both?

If you are after money-- Ideally, first consult an attorney who is independent of FINRA, cfpnet or similar and so has no potential conflicts of interest; someone who works for you and no one else on this case, and so s/he will put teeth into her/is actions. FINRA is formed by the same people it is supposed to regulate. Sure, its staff may be completely bias free. Problem is, FINRA's staff overwhelmingly do have, or have had, connections to brokerage firms. I believe their mission is to work for a free marketplace (which means fully honest transactions yada between its members and customers like yourself). But it's not the first place I would go, ideally.

For the same reasons, at present I would not go anywhere near your brokerage firm's compliance officer. In fact, I would say nothing further to anyone in your brokerage firm right now.

If you are not so much after money, and indeed you are worried about attorney fees, and also you want the firm to shape up, I would consider

A good attorney will be able to state upfront that (1) his/her fees may either be larger than the amount you stand to win; or (2) your case is so strong s/he'll win both the amount you lost and ensure the court orders the brokerage firm pay his fees.

You could also consider elaborating on the problem here, in relative anonymity, and get people's impressions. Maybe someone has had the same problem you are having with this firm.

Disclaimer: I have never worked in the investment industry or any financial service industry. I am an individual investor who has invested in stocks, bonds, CDs etc. for some 20+ years.

The next step would be to contact his compliance department. While they may be "on his side", they are also aware that if their suggested remedy to your reasonable complaint does not suffice, you will escalate the proceedings. That then includes them in any further scrutiny, which they don't like. You should also contact the CFP board of standards

Remember, if you end up in arbitration, records are your best friend! You seem to be doing well so far. Don't just show up and fervently recap your side of the story. That comes off as hotheaded and crazy. Think about what the people on Judge Judy do and then do the opposite of that:-) Bring emails (with full headers), letters, notes on phone convos (including date and time), market summaries over that time period, possibly even statements from the other parties to corroborate your account.

"kastnna" wrote

Prior to the elaboration, I was mostly worried about the possibility of evidence disappearing.

I can't say we have evidence that FINRA acts unbiased, either. Maybe FINRA does. But fact is much in the securities and exchange world goes unreported. Plus since arbitration typically disallows further legal action, we have no idea whether complainants were treated fairly relative to what an independent attorney might do.

But kastnna, replaced by whom?

The very people and firms FINRA is supposed to regulate provide the replacements.

No comment on the CFP Board.

Yes, it is. It's also bad business for a brokerage firm to have an incompetent working for it. But it happens.

I think this is a non sequitur. Assuming bias may also be the same as proceeding with caution. It does not require an attitude such as you propose, and it does no harm to "caveat emptor" particularly when there is at a minimum an appearance of "the fox guarding the henhouse."

Still, since the OP appears to be mostly interested in righting a wrong (and not money), I can see FINRA inter alia doing some good here.

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In my opinion the bad guys here are your former employer's 401K trustee and/or your former employer directly. The basis for this thought is that these are the people who have dumped your process into the hands of a brokerage firm that is not operating in your interest rather than providing appropriate administrative services to employees and former employees. It is presumably the case that the brokerage firm in question is operating as an agent (contractor) to the trustee (and hence to the employer).

I could not even remotely suggest that there is anything illegal here, but it seems certainly incompetent. You might consult an attorney regarding the fiduciary duties of the trustee and the employer, however.

Frankly rollover delays are not so unusual, depending on the company. I have had similar issue with my 401K company, one account took a lot longer than another one. But then again one account rolled over quickly. So even with the same company different accts. can be different.

As for what you would have gained or lose because of the delay, forget about it. You'll have to prove what your intentions were had the funds been transferred in time for you to invest in whatever you intended to invest in. Hindsight is 100%. What benefits did this broker gain by delaying this transfer? Did he make additional money the longer your acct. stayed? I doubt it. So he had no material gain by delaying (intentionally?) the fund transfer.

Wait - I am talking about the rollover amount only. For the sake of argument, let's say I was rolling over something that had been, for the months before and after my attempt, $110K. But due to the several month drag this person put on it and the market finally tanking in early Dec., the final amount was $100K. It does not matter what I would have invested it in.

What benefits did this

I don't know why he would do this. On the one call I had with him he explained he got some benefit from having more assets under his control, and thus was hopeful I would keep mine under his management. I don't know if this would be a reason to pretend a rollover had been initiated and then to lie about its status (in writing) going forward until cornered. It makes no sense to me either.

This has crossed my mind (the bad guys being the plan trustees). They've become extraordinarily quiet since this has soured, and were exceedingly unhelpful before that.

See but it does matter, or at least, this 10% loss may be the same outcome you would have seen anyway. If your 401k investments are the same as those in the IRA (or very similar in asset class), you'd have a near-10% loss today, regardless of how quickly the rollover had been processed. That's just what happened to the stock market recently, and to all of us who aren't blessed with perfect market-timing skills.

Similarly if you hadn't left this job, you would have had a 10% loss in your 401k, barring any change in investments.

Now if you're saying that you planned a major shift in investment strategy that would have avoided the loss, such as going to 100% cash...well that would be hard to prove. Why didn't you make the change in the 401k mix, while awaiting the rollover? If the market had gone up

Regarding the complaint itself, you might be interested in reading up on the recent Supreme Court Case "LaRue v. DeWolff, Boberg & Associates" (google that) which involved a failure to execute instructions. Not the same set of facts, but the underlying issue is the liability of different parties to the plan participant (you). If nothing else it's a road map to the complaint process itself, for a rare one that made it to the highest court in the US.

Your written complaint, and the email paper-trail you described, should trigger a response from the broker-dealer's OSJ. Failing that, as others posted, FINRA is an outlet for complaints against registered representatives of B/D firms...given that this is a 401k plan, you might poke around on the Department of Labor site as well. You'd be lucky to find a lawyer to take the case though, absent evidence of widespread and systemic bad-behavior - there may be no actual damages.

-Tad

Let me take a second to clear up some potentially confusing diction. The "plan trustee" is a fiduciary appointed to monitor and make decisions on behalf of the trust. The average 401k participant will likely never Speak to the actual plan trustee. The employer also usually has a "plan administrator". This is usually some HR sap appointed by the trustee that handles paperwork and day-to-day operations (loan requests, new enrollments, ROLLOVERS, etc). Lastly there is a "plan advisor" that convinced the company to use "his"

I was initially surprised when you said the plan advisor was handling the rollover as usually it is the plan admins duty. I suspect the only reason he would be involved would be to try and get your rollover business. But perhaps this is why the plan admin (and by proxy the employer) has had a "hands-off" approach so far.

Ordinarily your beef should lie with the plan admin, but in this case it sounds as if the CFP shot himself in the foot by trying to capture your rollover dollars.

Since when has the burden of proof been on the accused? We haven't proved relativity either, but in the absence of evidence to the contrary we accept it as true. A requisite of most good conspiracies is that they can't be proven in the affirmative any more so than in the negative.

To some extent I agree that arbitration should not prevent escalation to a civil court (it does not prevent criminal trials, even now).

The gov't of course. The FCC, USDA, FDA, FAA, and FTC all come quickly to mind. They serve the same purpose as SROs except that they are gov't appointed (which inexplicably makes them more "trustworthy" in the eyes of some).

I don't follow.

You're right and the regulatory boards work to weed them out (its no different with the AMA or ABA). To blame a regulatory agency for not stopping an incompetent worker prior to offense is a daunting task no matter what the industry. If a lawyer passes the bar is the the ABA supposed to know he is not a good lawyer BEFORE he mishandles a case? How can the FAA know that a certified pilot with no past problems is going to crash a plane? I son't see how the case is any different for a CFP. The only feasible answer I can surmise is to have tougher requirements to practice (which I am not opposed to).

I dont make that assumption (at least not in every case). I never said it "required" that attitude (I was asking out loud, not stating fact). A healthy dose of caution is usually a good thing. But my experience with people tells me that there is more than a few that have entered an arbitration meeting with the attitude that they were gonna get screwed. People who "wear their emotions on their sleeves" don't tend to do well in arbitrations or courtrooms. To win over a judge, it is smarter to appeal to logic and reason than emotion.

"kastnna" wrote

I am accusing FINRA of nothing other than its members and staff come from the very industry it is tasked to regulate. At a minimum there is some appearance of a conflict of interest.

But do not force me into a corner I do not occupy. All along I believe I have said FINRA is something to consider. It would not be my first choice if the damages appeared to be high, though.

Neither do I.

I said what I wanted to say. With all due respect to you, I do not want to test the uncompensated moderators' patience.

Rollover delays are very common, although rarely for the OPs reason (I hope). Normally, the paperwork is processed quickly and it is the company currently holding the funds that drag their feet. Like you said, it is possible that the paperwork could have been executed flawlessly and it still could have taken three weeks. According to the OP, the paperwork was not sent it. This sounds like a violation of the SECs "best execution" practices.

additional money

Personal gain will only prove intentional fraud, not oversight. An "honest mistake" is a mistake all the same and brokers can be (have been) found liable.

I agree the OP may definitely have trouble proving "damages". This may be a question better suited to Cal.

The market tanks whether you rolled it over or not. So had you rolled it over and invested it in something that tanked with the market, wouldn't the result have been the same? You have to be able to show that you'd intended to roll it over to something that would not have tanked along with the market, and that's a tough one to show.

The paperwork was simply not sent, but I was told that it had been, and was repeatedly given bogus status reports about where things stood. It seems possible that if I continued to go along with things, the rollover would never have happened.

By the way, once I executed the paperwork the rollover took 4 days start to finish.

additional money

I agree. I will ask for reimbursement but won't get sucked into an all out battle over it. As somebody pointed out, I could have left my money where it was until my investments turned around. I chose not to because I became nervous about this broker, whose ethics I'd begun to question, having access to my money, so I decided to give my market timing a best shot to pull out when I did. Unfortunately things are nowhere near as stable now as they were in October.

OP,

In regards to this, was the transfer set to be "in-kind" or liquidated?

agreed.

The account was a cash reserver created the same day as the original rollover request (the one that didn't happen) specifically for the purpose of this rollover. I always keep each rollover in a distinct account, and move each rollover into cash reserves to start until I figure out my investment plan for each batch of money.