Securities Lawyers Blog
The securities attorneys at Gana Weinstein LLP are investigating claims against Voya Financial Advisors Inc. (Voya Financial) broker Michael Hagan (Hagan). According to BrokerCheck records, Michael has been subject to seven customer complaints. The majority of these complaints concern the misrepresentation and unsuitable recommendation of variable annuities, equity indexed annuities, and Variable Universal Life (VUL) insurances.
Most recently, in April 2017, a customer alleged that Hagan recommended unsuitable investment products for the customer and misrepresented the nature of the investments. The dispute was settled at $164,455.
In January 2010, a customer alleged that in February 2000, Hagan’s recommendation of John Hancock Variable Universal Life (VUL) insurance was unsuitable and should be reexamined.
VUL are complex insurance and investment products. One feature of a VUL policy is that the owner can allocate his payments to a separate sub-account that is typically placed into various investments. The other feature of a VUL is that administrative fees and the insurance charge are deducted from the cash value of the policy each month. The cash value of the policy increases or decreases depending on how well the investments perform. Customers must be careful in purchasing VULs because if the policy terminates or lapses, the remaining cash value won’t be sufficient to pay off the monthly deductions and charges. While an investor may be able to afford the initial purchase price of the policy, it may be too expensive for the client to continue to make premium contributions over time causing the policy to lapse.
Brokers are obligated to make suitable investments for clients by following certain criteria. First, there must be reasonable basis for the recommendation based upon the broker’s research and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factors.
The number of complaints against Hagan 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.
Hagan has been in the securities industry for 29 years and has been registered with Voya Financial since 1999. He was previously registered with Fortis Investors, Inc., Pruco Securities Corporation, and the Prudential Insurance Company of America.
At Gana Weinstein LLP, our securities 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.