In a case so complicated it resembles an extra credit question on a certification exam, FINRA has ruled that sometimes investments can lose money and it isn't the advisor's fault.
Investors Arbitration Specialists versus SECU Brokerage Services featured a lot of the classic complicating factors: an elderly investor (now deceased), a trust as successor claimant, a credit union brokerage unit as defendant, commercial real estate, a 1031 exchange, and clients passed from broker to broker across state lines as firms merge.
SECU acquired the liability for Helen Cohen's advisor-suggested trade of an apartment complex for a stake in a larger real estate management company in 2008, when it bought San Diego brokerage firm XCU Capital and rolled it into its existing bank-oriented business.
But when the new venture went south, Cohen's trustee challenged the suitability of the investment, noting among other things that Mrs. Cohen was described as "easily confused" and so might not have understood what she was getting into.
FINRA says the XCU broker -- and by extension, SECU -- did nothing wrong. The claimant now wants to take the case to court.