Securities Arbitration Lawyer Blog
FINRA has suspended financial advisor Timothy James Pandekakes (CRD No. 4890164) from the securities industry for three months and ordered him to pay partial restitution of $20,000.
FINRA alleged that between January 2016 and April 2018, while employed by Cadaret, Grant & Co., Inc. in Bronxville, New York, Mr. Pandekakes recommended four unsuitable exchanges of variable annuities, in violation of FINRA Rules 2111, 2330, and 2010.
Timothy Pandekakes was a financial advisor at Cadaret, Grant & Co., Inc. from December 2004 through June 2019. During the same period, he was also affiliated with MDIC Investment Company in Bronxville, New York. According to public records, Mr. Pandekakes’ employment was terminated by Cadaret, Grant & Co., Inc. in June 2019 for engaging in investment practices inconsistent with firm expectations.
Since August 2019, Mr. Pandekakes has been employed by American Portfolios Financial Services, Inc. in Yonkers, New York. He has also been affiliated with an entity named MDIC Investment.
If you have suffered financial losses investing with Timothy James Pandekakes, or you were sold an annuity that you suspect may not have been suitable for you, contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential review of your investments.
Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as Cadaret, Grant & Co., Inc. and American Portfolios Financial Services, Inc.
What is a Variable Annuity?
A variable annuity is a contract between an investor and an insurance company, whereby the insurance company promises to make periodic payments to the investor or a beneficiary designated by the investor. A variable annuity serves as an investment account that may grow on a tax-deferred basis, includes insurance features, and offers the investor to receive periodic income payments. Variable annuities allow customers to choose from a complex array of contract features and investment options, including various share classes and optional riders. Each variable annuity is unique. The investor pays extra for the features offered by variable annuities.
Variable annuities can help investors meet retirement or other long-term goals. However, variable annuities are not suitable for all investors, especially for investors with short-term needs or objectives. Variable annuities are complex and can be costly due to fees or taxes and surrender charges that may apply if money is withdrawn early. Variable annuities also involve investment risks and include contract fees. Accordingly, financial advisors must exercise particular care to ensure that the purchase or exchange of variable annuity is suitable for a customer before recommending the product to a customer.
FINRA Rule 2111 requires that all investment recommendations be in the best interest of the customer. FINRA Rule 2330 provides investors with additional protections related to annuities. The rule requires that when a financial advisor recommends an exchange of a variable annuity, the financial advisor must consider whether the customer would incur a surrender charge, be subject to a new surrender period, lose existing benefits (such as death, living, or other contractual benefits), or be subject to increased fees or charges (such as mortality and expense fees, investment advisor fees, or charges for riders and similar product enhancements).
FINRA’s Allegations – Pandekakes Recommended Four Unsuitable Exchanges of Variable Annuities
From January 2016 through April 2018, Mr. Pandekakes recommended four unsuitable exchanges of variable annuities. Specifically, FINRA alleged:
- Pandekakes recommended that two customers, who were a married couple nearing retirement, exchange four variable annuities without having a reasonable basis to believe that the exchanges were suitable for them.
- In each instance, Mr. Pandekakes recommended that the customers exchange the variable annuity during its surrender period, which caused the customers to pay $44,406.17 in surrender fees.
- Moreover, in each instance, the recommended exchange caused the customers to lose living and death benefits, such as long-term income riders with guaranteed growth rates, for which they had already paid.
- In addition, each recommended exchange subjected the customers to a new surrender period.
FINRA’s Letter of Acceptance, Waiver, and Consent No. 2019061498801 ordered Mr. Pandekakes to pay partial restitution of $20,000, plus interest to the married couple.
An order by FINRA to pay partial restitution to customers does not preclude investors from pursuing their own claims to seek restitution or other available remedies.
Cadaret, Grant & Co., Inc. – A Duty to Supervise
Financial institutions like Cadaret, Grant & Co., Inc. must properly supervise financial advisors and customer accounts. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity, such as variable annuity switches, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.
If you were an investor of Timothy James Pandekakes and have suffered investment losses, or suspect that Mr. Pandekakes did not have your best interest in mind when recommending investments, annuities, or annuity switches, contact New York securities arbitration attorney August Iorio of Iorio Altamirano LLP. August Iorio can be reached at august@ia-law.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your account or annuity contract.
Additionally, if you were a customer of Cadaret, Grant & Co., Inc. and have suffered investment losses, or suspect wrongful conduct with respect to annuities, contact Iorio Altamirano LLP today for a free and confidential review of your account.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. Iorio Altamirano LLP pursues FINRA claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by stockbrokers and brokerage firms.