Articles Tagged with variable annuities

The Financial Industry Regulatory Authority (“FINRA”) has barred stockbroker Charles Thomas Stevens from the securities industry for failing to appear and provide on-the-record testimony.

On December 1, 2020, FINRA’s Department of Enforcement filed a three-cause complaint against Mr. Stevens.  The first cause of action charged that Mr. Stevens willfully failed to disclose a judgment and three tax liens on his Uniform Application for Securities Industry Registration or Transfer (Form U4).  The second cause of action alleged that Mr. Stevens falsely represented to his firm that he did not have any unreported liens.  The third cause of action alleged that Mr. Stevens failed twice to appear and testify at an on-the-record interview.

Mr. Stevens then failed to appear at two-pear hearing conferences scheduled by the hearing officer.  FINRA’s Department of Enforcement then requested a default decision, which the hearing officer granted.

The Financial Industry Regulatory Authority (“FINRA”) has suspended stockbroker Victor A. Rigoni, III from the securities industry for three months.  FINRA accepted an Offer of Settlement submitted by Mr. Rigoni after FINRA’s Department of Enforcement filed a disciplinary complaint against Mr. Rigoni in August 2020.   The complaint alleged that from August 2012 through March 2019, Mr. Rigoni willfully failed to timely amend his Uniform Application for Securities Industry Registration or Transfer (Form U4) to disclose six unsatisfied federal and state tax liens totaling $164,521.  On average, Mr. Rigoni disclosed his tax liens almost three-and-a-half years late.  Mr. Rigoni also never disclosed a state tax lien of $11,304.

Mr. Rigoni has been associated with the following broker-dealers:

  • Cetera Advisor Networks LLC in Lake Forest, Illinois, from September 2019 to August 2020.

Iorio Altamirano LLP is investigating claims on behalf of Triad Advisors LLC (“Triad”) customers after the firm was censured and fined $150,000 by FINRA for supervisory failures related to i) switches and short-term trading of A-share mutual funds in customer accounts and ii) variable annuity exchanges. Triad was also ordered to pay restitution of $43,998 plus interest to customers identified by FINRA.

If you have lost money with Triad, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.

Triad has been a FINRA member since March 1990 and is headquartered in Atlanta, Georgia. The firm conducts a general securities business, is a registered investment advisor (RIA), and a licensed insurance agency.  Triad had 936 registered representatives in 357 branch offices as of December 2020.

We are continuing our discussion of FINRA’s 2021 Report on Risk Monitoring and Examination Activities. In Part Two, we will focus on FINRA’s comments and findings related to Variable Annuities, Outside Business Activities, and Private Securities Transactions and Private Placements. These are all areas of interest that directly affect retail investors, and in which FINRA found deficiencies following its examination of member-firms. 

If you are interested in FINRA’s comments regarding Regulation Best Interest (Reg BI), Communications with the Public, and Best Execution, you can read Part One of our discussion here.

Variable Annuities

The Financial Industry Regulatory Authority (“FINRA”) has suspended financial advisor Lisa Ann Brumm (also known as Lisa Am Brumm and Lisa Ann Moon) from the securities industry for six months and fined her $7,500.  Lisa Brumm was registered with Woodbury Financial Services, Inc. in Portland, Oregon, from April 2017 until December 2020.  She was previously registered with AXA Advisors, LLC (now known as Equitable Advisors LLC) from July 2011 to May 2017.   Ms. Brumm is also the CEO and founder of My Financial Girlfriend (Moon & Bear LLC).

FINRA suspended Ms. Brumm for recommending two unsuitable variable annuities to a customer, borrowing $40,000 from the same customer, and negligently misrepresenting the effect of a withdrawal from a variable annuity to another customer.

If you have suffered financial losses investing with Lisa Brumm or suspect that Ms. Brumm did not have your best interest in mind when recommending investments, annuities, or annuity switches, contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential review of your account or annuity contract.

VALIC Financial Advisors, Inc. (“VFA”) and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on January 8, 2021, over supervisory and reporting violations. Specifically, FINRA found that:

  • Between January 1, 2017, and October 31, 2018, VFA failed to establish a supervisory system and written procedures for the surveillance variable annuity rates exchanges and for corrective action in case of inappropriate exchanges.
  • During this period, VFA also failed to establish a supervisory system and procedures for the review of transactions where a registered representative recommended that a customer invest additional funds into existing variable annuities.

Investing your money is a great way to grow your wealth, save for retirement, and reach your financial goals.  If you invest in the appropriate products, you can also receive income from investments, build on-pre-tax dollars, or reduce taxable income.

If you do not invest, you miss out on opportunities to increase your wealth.  However, all investments carry risk, and when you invest, you have the potential to lose money.

There are many different types of investments.  Some common types of investments include stocks, bonds, certificates of deposit, mutual funds, money market funds, exchange-traded funds, and annuities.  There are also more complex investment vehicles, such as real estate investment trusts (REITs), unit investment trusts (UITs), hedge funds, commodities, and private placements.

Iorio Altamirano LLP is investigating claims on behalf of Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC customers (together “Wells Fargo” or the “Firm”) who received recommendations to switch from variable annuities to investment company products. If you have lost money with Wells Fargo, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.

Wells Fargo and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on September 2, 2020, over allegations that between January 2011 and August 2016, Wells Fargo violated FINRA rules. Specifically, that Wells Fargo:

  • Failed to establish and maintain a supervisory system, and failed to enforce written supervisory procedures (“WSPs”), that were reasonably designed to achieve compliance with FINRA’s suitability rule as it pertains to switches from variable annuities to investment company products (i.e., mutual funds, Unit Investment Trusts (UITs), etc.).

FINRA has suspended financial advisor Paul Zakhary (CRD No. 6399894) from the securities industry for three months and fined him $5,000.

FINRA alleged that between January and August 2018, while employed by J.P. Morgan Securities LLC in The Villages, Florida, Mr. Zakhary made unsuitable recommendations to three customers to sell variable annuities and replace them with fixed annuities, in violation of FINRA Rules 2111 and 2010.

Paul Zakhary was a financial advisor at J.P. Morgan Securities LLC from October 2017 until August 2019., working out of the firm’s branch office in Ocala, Florida.  J.P. Morgan Securities LLC terminated Mr. Zakhary’s employment for violating the firm’s annuity switch policy related to annuity surrenders and managed brokerage transactions.

When an investor suffers harm, including investment losses, due to misconduct by a financial advisor or broker-dealer, the investor can file a securities arbitration claim against their financial advisor and/or broker-dealer in an effort to be compensated. The case will be presented and defended in an arbitration proceeding to a panel of arbitrators instead of a court of law in front of a judge and jury.

Arbitration is the primary forum for resolving disputes between investors and brokerage firms or financial advisors because the parties have contractually agreed to use arbitration as an alternative dispute resolution process. When an investor opens an account with a broker-dealer, the investor is required to sign an array of account opening documents. These account opening documents regularly include an arbitration clause, which requires that arbitration be used as an alternative to litigation. This requirement is often a contractually binding obligation for both parties. As a result, disputes between investors and financial advisors or brokerage firms are resolved in arbitration as an alternative to court.

The Financial Industry Regulatory Authority (FINRA) is authorized by Congress to regulate the financial services industry and operates the largest arbitration forum for securities disputes. Most securities arbitrations take place using FINRA’s Dispute Resolution Services’ arbitration forum because, as FINRA members, financial advisors and brokerage firms are required to arbitrate customer complaints upon the filing of a claim through FINRA.

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