Securities Lawyers Blog

According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Philip Smith (Smith), currently associated with Oneamerica Securities, INC., has at least 3 disclosable events. These events include one customer complaint, 2 regulatory events, alleging that Smith recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.

FINRA BrokerCheck shows a final customer complaint on May 12, 2024.

California resident insurance license was suspended due to FINRA AWC and suspension in 2022. With regard to the AWC, without admitting or denying the findings, Smith consented to the sanctions and to the entry of findings that he made unsuitable recommendations for a family trust formed by a senior married couple. The findings stated that Smith and another registered representative at his member firm recommended that the trust purchase a deferred variable annuity for approximately $540,000 and fund that purchase through two withdrawals from an indexed annuity owned by the trust. Smith was aware that funding the purchase of the variable annuity with withdrawals from the trust’s existing annuity could result in negative tax consequences for the trust and was also aware that the recommendation to purchase the variable annuity would not be suitable if it caused negative tax consequences for the trust. However, neither Smith nor the other representative researched how the trust might be able to purchase the variable annuity without negative tax consequences. Instead, Smith recommended that the trust withdraw funds from the indexed annuity via two checks payable to the trust and immediately endorse the checks as payable to the firm in order to fund the purchase of the variable annuity. The trust, through its trustee, followed Smith’s recommendations. Smith mistakenly believed that having the trust immediately endorse the checks as payable to the firm would avoid any adverse tax consequences, but he did not confirm that belief. The withdrawal of the funds from the indexed annuity were, in fact, taxable events that resulted in negative tax consequences to the trust. The adverse tax consequences could have been avoided if Smith or the other representative had recommended the new variable annuity be purchased as a tax-free 1035 exchange, but they failed to research that option.