Securities Lawyers Blog
According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA), advisor Barbara Shaffer (Shaffer), currently employed at Cambridge Investment Research, Inc. (Cambridge), has been subject to at least four customer complaints during the course of her career. Several of those complaints against Shaffer allege that Shaffer engaged in authorized trading and recommended unsuitable investments, including into the GPB Ponzi scheme among other allegations of misconduct relating to the handling of their accounts. However, three of these complaints have been expunged from Shaffer’s record under FINRA’s notoriously flawed expungement procedures.
In January 2020, a customer complained that Shaffer violated securities laws by alleging that Shaffer engaged in negligent investment advice and breach of fiduciary duty. The claim alleged $100,000 in damages and settled for $45,000.
In another complaint, the customer alleged unsuitability and breach of fiduciary duty against focused on a $100,000 investment in GPB Automotive Fund, L.P. The GPB funds were later accused of being a Ponzi Scheme by many regulators and its executive officers have been indicted by the DOJ.
Due to FINRA expungement, our firm believes that Shaffer’ clients and potential clients now lack relevant information in assessing the risk of doing business with Shaffer due to FINRA’s flawed expungement practices. As detailed below, you can judge for yourself whether or not Shaffer merits the clean record he now enjoys. As shown in Shaffer’s expungement “award”, Shaffer sued her own employer due to the placement on her record of three customer complaints. The “hearing” that took place appears to have been perfunctory at best. The hearing concerning three customer complaints took only one hearing session to complete. Usually there are two hearing sessions a day – meaning in this case three separate cases with different customers and different facts were probably decided in time for the arbitrator to catch lunch.
Expungement should only be granted in cases where the information is clearly erroneous and has no probative value – not when an arbitrator quickly decides a one sided hearing with little to no evidence presented. Expungement is not simply a process to determine who would have won absent a settlement agreement but a remedy to be provided only when the complaint has no truth to it or arguable merit – a very rare circumstance. In our opinion it would be extraordinarily rare and in reality, impossible for multiple investor complaints against the same broker to all have no truth or merit.
Such decisions highlight the easy manipulation and exploitation of a system that now hundreds of brokers appear to utilize to clear their records of valuable information the public needs for their protection. According to the PIABA Foundation, 1,078 expungement-only cases have been filed from 2015 to 2018. The study concluded that “The Finra [expungement] process is being systematically gamed, exploited and abused with one-sided hearings, manipulation of arbitrator selection, deletion of significant customer complaints and abusive (and possibly fraudulent) conduct to such an extent that it must be frozen until it can be repaired.”
Shaffer first entered the securities industry in 1988. Since 2019, Shaffer has been registered with Cambridge Investment Research, Inc. out of the firms Fort Lauderdale, Florida office.
At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to suitability violations and unauthorized trading. Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.