Securities Lawyers Blog
The securities lawyers of Gana Weinstein LLP are investigating the regulatory complaint filed by The Financial Industry Regulatory Authority (FINRA) against broker Thomas Schober (Schober). The FINRA regulatory action alleges that Schober recommended unsuitable variable annuity exchanges in the accounts of two senior customers ages 84 and 83. According to FINRA, one of the customers held power of attorney for the other who suffered from dementia and both customers were conservative investors with limited financial means who relied on the income from their investments. FINRA found that Schober effected the annuity exchanges to benefit himself at the customers’ expense. The exchanges caused the customers to pay total surrender charges of approximately $154,642 to sell their annuities and then to pay sales charges of approximately $69,000, of which Schober received approximately $65,000 in commissions, and incurred new surrender periods.
FINRA found that Schober never disclosed to them the amount of the surrender charges they would incur to sell their annuities and didn’t explain the sales charges associated with the purchase of the new annuities or that they would be subject to new surrender periods. FINRA found that Schober attempted to conceal the unsuitable annuity exchanges by providing false information concerning the source of funds on the annuity transaction documents.
Variable annuities are complex financial and insurance products. In fact, recently the Securities and Exchange Commission (SEC) released a publication entitled: Variable Annuities: What You Should Know encouraging investors to ask questions about the variable annuity before investing. Essentially, a variable annuity is a contract with an insurance company under which the insurer agrees to make periodic payments to you. The investor chooses the investments made in the annuity and value of your variable annuity will vary depending on the performance of the investment options chosen. The primary benefits of variable annuities are the death benefit and tax deferment of investment gains.
However, the benefits of variable annuities are often outweighed by the terms of the contract that include exorbitant expenses such as surrender charges, mortality and expense charges, management fees, market-related risks, and rider costs.
Schober entered the securities industry in 1994. From June 2006 through January 2015, Schober was registered with SII Investments, Inc. out of the firm’s Westborough, Massachusetts office location.
The investment fraud attorneys at Gana Weinstein LLP represent investors who have suffered securities losses due to the mishandling of their accounts. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.