Securities Lawyers Blog
According to BrokerCheck records financial advisor Anthony Ferrara (Ferrara), currently employed by Larson Financial Securities, LLC (Larson Financial), has been subject to four customer complaints. According to records kept by The Financial Industry Regulatory Authority (FINRA), in July 2017 a customer filed a complaint alleging that Larson Financial made unsuitable recommendations and material omissions in the sale of a variable universal life (VUL) policy that was purchased in 2013. The customer requested $40,000 in damages and is currently pending. Many of the complaints concerning Ferrara’s conduct include claims concerning the sales of VULs.
In January 2017 another customer filed a complaint alleging unsuitability of the product, misrepresentation, breach of fiduciary duty, deceptive business practices, general fraud and negligence. The customer alleged $350,000 in damages and the claim is currently pending.
VUL are complex insurance and investment products that investors must fully understand the risks and benefits of prior to investing. One feature of a VUL policy is that the owner can allocate a portion of his premium payments to a separate sub-account that can be used to grow in value through investments. Monthly charges for the life insurance policy, including a cost of insurance charge and administrative fees, are deducted from the policy’s cash value. The cash value of the policy may increase or decrease based on the performance of the sub-account investments. In addition, the VUL policy terminates, or lapses, if at any time the net cash surrender value is insufficient to pay the monthly cost deductions. Upon termination of the policy, the remaining cash value becomes worthless.
Given the costs involved in purchasing VULs, brokers must be careful to ensure that the recommendation to invest in VULs is suitable for the client. For example, if a policy is too expensive for the client to continue to make premium contributions to the policy could lapse over time.
The number of complaints against Ferrara are unusual compared to his peers. According to newsources, only about 7.3% of financial advisors have any type of disclosure event on their records among brokers employed from 2005 to 2015. Brokers must publicly disclose reportable events on their CRD customer complaints, IRS tax liens, judgments, investigations, and even criminal matters. However, studies have found that there are fraud hotspots such as certain parts of California, New York or Florida, where the rates of disclosure can reach 18% or higher. Moreover, according to the New York Times, BrokerCheck may be becoming increasing inaccurate and understate broker misconduct as studies have shown that 96.9% of broker requests to clean their records of complaints are granted.
Ferrara entered the securities industry in 2002. From March 2002 until March 2010 Ferrara was registered with Pruco Securities, LLC. From March 2010 until August 2010 Ferrara was registered with Financial Network Investment Corporation. Since July 2010 Ferrara has been registered with Larson Financial out of the firm’s Minneapolis, Minnesota office location.
At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.