A financial adviser in the US has shared his story of how he (just) survived a high-profile lawsuit.
Steven Kolinsky was sued by two former clients, who were also former Major League Baseball players. The lawsuit was over a failed property investment during the GFC, which Kolinsky said he also lost a lot of money in.
“…They filed suit in federal court claiming they had been victims of a real estate scam and securities fraud. Within minutes, Sports Illustrated’s website published an article – Former players’ lawsuit claims they were bilked in real estate scam,” Kolinsky wrote, on Wealthmanagement.com.
In addition to a New Jersey Bureau of Securities’ investigation, Kolinsky was also investigated by the IRS, SEC and FINRA as well as the New Jersey Attorney General's Office. The investigations were eventually administratively closed, but Kolinsky said the damage was done.
“In a business where we depend on recommendations, my name was destroyed. In the age of Google, every negative article, every negative mention would exist essentially forever. This wasn’t just a mark against me, but also against my employees and my son who, at the time, was just starting his career as a Certified Financial Planner.”
Three years later, Kolinsky is still dealing with the fallout, as prospective clients only find stories about the two high-profile disgruntled clients.
“I’ve learned that even the most honest adviser can be mired in a similar bureaucratic nightmare. Hopefully, other advisers can benefit from my experience,” Kolinsky wrote.
In retrospect, he said he should have fought the proceedings “tooth and nail”.
“Being sued is not the big deal. In our litigious society, that’s a simple fact of life. It’s the damage to my reputation. That’s what really hurt.
“Working with celebrities comes with benefits. But you need to fully understand the risks to your business and name if that relationship turns sour. For a celebrity, one phone call gets the world jumping. When you are a financial adviser dealing with a celebrity issue, there is nobody you can call.”
Kolinsky’s full story is available at wealthmanagement.com.