Broker Investigation: SagePoint Financial’s Scott Aabel

shutterstock_145368937The investment attorneys of Gana LLP are interested in speaking with clients of Scott Aabel (Aabel). According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) Aabel has been the subject of at least 10 customer complaints, one regulatory event, three judgment or liens, and three financial disclosures. The customer complaints against Aabel allege securities law violations that claim unsuitable investments and misrepresentations among other claims involving mostly variable annuity products.

In June 2009, a customer filed a complaint alleging $71,873 in damages stemming from a loss of a living benefit rider for an annuity contract. In September 2007, a customer complained that the performance and fees for a variable annuity were misrepresented to the customer leading to losses of $13,595.

Also in April 2012, the Florida Office of Financial Regulation Division of Securities filed an administrative complaint against Aabel alleging violations of the state’s code and imposed a fine of $70,000.

In addition, there are three liens filed against Aabel. In July 2013, a $45,287 tax lien was imposed. In September 2012, Aabel received a $88,850 tax lien. Also in September 2012, another $203,045 tax lien was imposed against Aabel. A broker with large liens are an important consideration for investors to consider when dealing with a financial advisor. An advisor may be conflicted to offer high commission investments to customers in order to satisfy liens and debts that may not be in the client’s best interests.

Aabel entered the securities industry in 1991. From May 1991, until April 2013, Aabel was associated with Prime Capital Services, Inc. Since March 2013, Aabel has been associated with SagePoint Financial, Inc. out of the firm’s Nokomis, Florida branch office location.

Many of the complaints involve the sale of variable annuities. Variable annuities are complex products that combine aspects of investing and insurance. The Securities and Exchange Commission (SEC) has 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, variable annuities are often unsuitable for investors because 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.

The number of customer complaints against Aabel is high relative to his peers. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must publicly disclose certain types of reportable events on their CRD including but not limited to customer complaints. In addition to disclosing client disputes brokers must divulge IRS tax liens, judgments, and criminal matters. However, FINRA’s records are not always complete according to a Wall Street Journal story that checked with 26 state regulators and found that at least 38,400 brokers had regulatory or financial red flags such as a personal bankruptcy that showed up in state records but not on BrokerCheck. More disturbing is the fact that 19,000 out of those 38,400 brokers had spotless BrokerCheck records.

The investment lawyers at Gana LLP represent investors who have suffered investment losses due to allegations of wrongdoing. 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.