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Buffer Annuities: Why Regulators Are Seeing Complaints

Regulators are beginning to shift their attention toward buffer annuities, a new kind of variable annuity. These annuities are extremely complicated and utilize structured products, rather than mutual funds, in the sub-account as the underlying investment. Donald Lopezi, Senior Vice President and Regional Director of FINRA's western region, has noted that the regulator has started to see complaints regarding these annuities. “I spent some time with my team trying to see how this thing works,” Lopzi stated. “It's very complicated. I can't speak nationally but we are starting to see some complaints on those products in the west region.” He further noted, “We have some individuals who really understand [variable annuities] and they were struggling with this. You have to wonder, does the firm understand it? Does the rep?” Buffer annuities got their name because they are contracts that use structured products to buffer clients' account values against downside losses. They started to gain traction among financial advisors about three [...]

By |January 25th, 2017|FINRA, Legal Matters, Press Releases & News|
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FINRA January 2017 Disciplinary Actions

FINRA takes disciplinary actions against firms and individuals for violations of FINRA rules; federal securities laws, rules, and regulations; and the rules of the Municipal Securities Rulemaking Board. Below are a number of penalties announced by the regulator in January 2017. If you have been a victim of any of the below behavior, you may have legal recourse. Please contact attorney Richard Frankowski today at 888-741-7503 for a free consultation. FINRA censured and fined VFG Securities, Inc. of Culver City, California $50,000, $10,000 of which is joint and several with Jason Bryce Vanclef. According to FINRA, the firm and Vanclef distributed and listed for sale online Vanclef's self-published book, which contained, false, exaggerated, unwarranted, or misleading statements, and omitted material facts or qualifications where the omissions caused the communication to be misleading. The findings also state they provided customers with misleading personalized recommendation spreadsheets. Advisors Clearing Network, Inc. of Pasadena, California was also censured and fined $50,000. FINRA found that it [...]

By |January 24th, 2017|Broker Check, FINRA, Fraud, Legal Matters, Press Releases & News, SEC|
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VFG Securities Settles Claims With FINRA

VFG Securities Inc., a small broker-dealer, and its owner, Jason Vanclef, reached a settlement agreement with FINRA regarding allegations that he and the firm had customers overly concentrated in illiquid investments and had used a book he had written to pump up these alternative investments. FINRA had filed a complaint claiming that the firm failed to supervise its brokers to ensure that customers' portfolios would not become overly concentrated in illiquid investments. Between November 2010 and June 2012, nearly 95% of VFG Securities' revenue was obtained through the sale of nontraded REITs and other direct participation programs, which are illiquid assets for retails investors, FINRA said. FINRA further accused Vanclef of using a book he had written, "The Wealth Code," as sales literature to promote investments in nontraded REITs and DPPs "to lure" potential investors to VFG Securities. Vanclef “repeatedly claimed in 'The Wealth Code' that nontraded DPPs and nontraded REITs offer both higher returns and [...]

By |January 2nd, 2017|FINRA, Press Releases & News|
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Mark Tauzin Suspended For Unsuitable Trading

FINRA suspended former LPL Financial broker Mark Tauzin for engaging in unsuitable short-term trading of unit investment trusts as well as maintaining blank, signed forms in customer files. He was suspended for eight months from any FINRA registered broker-dealer, fined $20,000 and required to pay $205,000 plus interest to 14 sets of clients. That sum represents the commissions he generated from November 2012 to November 2014 by buying and selling UITs, according to the settlement. Over the two year period, while he was registered with LPL, Tauzin recommended the purchase of UITs, which typically carry significant upfront charges, and the subsequent sales of those products within a year of purchase, according to FINRA. The UITs Tauzin recommended had maturity dates of 24 months or longer and carried initial sales charges ranging from 2.5% to 3.95%. “Within the accounts of these 14 households, Tauzin effected 215 UIT transactions that were sold within a 12-month time period,” according to FINRA. [...]

By |October 21st, 2016|Broker Check, FINRA, Press Releases & News|
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