One of the most influential advisors in the wealth management industry faces a client arbitration claim seeking at least $500,000 in damages.
CWM — Ron Carson’s RIA entity, also known as Carson Wealth — improperly notified a product sponsor that a client had left the firm and, as a result, the client was overcharged fees, according to an arbitration case listed on FINRA BrokerCheck. In addition, the client claims “CWM’s investment advisory fees were excessive.”
This is the first regulatory ding for Carson — who decided to drop his FINRA license effective Jan. 31 — in almost 15 years.
Like many advisory firms, the Omaha, Nebraska-based RIA had negotiated with product sponsors to charge its clients lower fees than the general public. However, CWM “improperly notified a product sponsor that the client was no longer a client of CWM, resulting in the client being charged the product sponsor’s standard fees (instead of the lower negotiated rate),” according to the BrokerCheck disclosure. “As a result, the client claims that it was overcharged fees by the product sponsor.”
The complaint was filed Dec. 24 and has not been previously reported. BrokerCheck does not list a response from Carson.
“For clarification, Carson, in fact, negotiated on the client’s behalf to save the client millions — not cost the client, as stated in the dispute,” Ron Carson said in an emailed statement. “The firm never received any of the aforementioned fees from the client, a sponsor, or any other third party in exchange for services and, by negotiating great terms, actually made the client millions of dollars on their investment.”
Asked whether other client accounts may have been similarly affected, a representative for CWM declined to comment.
The claim is the first against Carson since he left LPL Financial for Cetera Advisor Networks at the beginning of 2017.
In a March 2004 complaint, clients filed an arbitration claim alleging their mutual funds were “unsuitable and not properly diversified,” according to BrokerCheck. The clients later withdrew the claim; the reasons for the withdrawal were not disclosed. Carson strongly denied the allegations at the time, according to the reply he posted online on his BrokerCheck record.
In February of the same year, former clients of Carson won compensatory damages of $50,000 from an arbitration case filed in 2002 seeking $12 million. The case accused Carson and LPL of negligence, negligent supervision, misrepresentations, breach of contract and other claims. The case involved “action taken or not taken regarding Level 3 stock and Level 3 option positions,” the award document shows.
Last year brought the strongest-ever growth for Carson’s operations, which added a record 49 new practices. An office of supervisory jurisdiction, Carson Wealth has grown to 96 partner firms serving more than 22,000 households. Advisors with $4.4 billion in client assets signed agreements to join Carson’s OSJ in the fourth quarter, bringing its total committed client assets for the year to $7.5 billion, according to the firm. Separately, more than 1,285 practices have joined Carson’s advisor coaching network.