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FINRA SANCTIONS FIFTH THIRD SECURITIES, INC. OVER VARIABLE ANNUITY EXCHANGES

The Financial Industry Regulatory Authority (“FINRA”) has announced a fine of $4 million and required an additional $2 million in restitutionary damages from Fifth Third Securities, Inc. for its failures to consider and accurately describe the costs and benefits of variable annuity exchanges, and for recommending variable annuity exchanges without a reasonable basis to believe the exchanges were suitable. According to the FINRA release, Fifth Third’s principals approved approximately 92 percent of the variable annuity exchange applications submitted to them for review, even though such exchanges are complex investments with costs that may outweigh the potential benefits of the transaction. In a random sample of Fifth Third’s variable annuity exchanges from 2013 to 2015, FINRA found that Fifth Third had misstated or omitted at least one material fact related to the costs or benefits of the exchange in approximately 77 percent of the reviewed transactions. Variable annuities are complex investments that are high-cost vehicles with a handful of narrow benefits [...]

By |May 8th, 2018|SEC|
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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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Richard Gearhart & George McKown Charged With Securities Fraud

Richard Gearhart of Lowell, Indiana and George McKown of Indianapolis, Indiana have been indicted on fraud charges after prosecutors claim they sold securities to investors despite not being registered to do so. The two were charged with conspiracy to commit securities fraud, securities fraud, and wire fraud, said U.S. Attorney David Capp. According to court documents, Gearhart and McKown allegedly sold securities to people who transferred their pensions, annuities, 401(k)s and cash to invest with them, through Asset Preservation Specialists Inc. under the guarantee that their investments would remain safe. Neither Richard Gearhart nor George McKown was registered to sell securities with the U.S. Securities and Exchange Commission or the state of Indiana. Secretary of State Connie Lawson said in a news release that no matter how trustworthy someone seems, potential investors should ensure that person and the person's businesses are registered with the state of Indiana. "Gearhart had all the warning signs of a typical [...]

By |January 16th, 2017|Fraud, Press Releases & News, SEC|
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