Articles Tagged with variable annuities

shutterstock_175835072-300x199The 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. Continue Reading

shutterstock_25054879-300x200The securities attorneys at Gana Weinstein LLP are investigating claims against Coastal Equities, Inc. (Coastal Equities) broker Andrew Pravlik (Pravlik). According to BrokerCheck records, Pravlik has been subject to a regulatory matter in which the Financial Industry Regulatory Authority (FINRA) sanctioned Pravlik for various violations of the securities laws. In 2009, Pravlik falsely labeled 30 redemption requests as Required Minimum Distributions (RMDs) when he entered them into the firm’s mutual fund system. By doing so, he prevented a deferred sales charge that would have applied to the redemptions, and falsified the firms records.  In May 2010, Pravlik was fined $5,000 and suspended for 90 days.

In addition, Pravlik also been subject to two customer complaints concerning unsuitable risky investments, one of which is still pending

In October 2017, customers alleged that Pravlik placed them in unsuitable investments that did not match with their investment portfolio. The customer has requested damages of $175,000. This dispute is still pending.

In September 2013, a customer alleged that Pravlik placed the customer in high-risk variable annuities which were unsuitable to the customer’s investment portfolio.

Pravlik has also been discharged from two firms of employment. In February 2009  Pravlik was discharged from Hefren-Tilotson, Inc. for failing to comply with industry standards. In November 2017, Pravlik was discharged from Prospera Financial Services for violating the firm policy to send written correspondence. Continue Reading

shutterstock_61142644-300x225The securities attorneys at Gana Weinstein LLP are investigating claims against Summit Brokerage Services (Summit Brokerage) broker Michael Mathias (Mathias). According to BrokerCheck records, Mathias has been subject to twenty customer complaints, two of which are still pending. The majority of the complaints concern the unsuitable recommendation of variable annuities.

Most recently, in August 2017, a customer alleged that Mathias recommended unsuitable investments to customers, requesting $433,687 in damages. This dispute is currently still pending.

In 2001, a customer alleged that Mathias did not reimburse client for deferred sales charges. The customer further alleges that the annuity investment recommended was not suitable for him.The client is requesting $10,000 in damages. This dispute is currently still pending. Continue Reading

shutterstock_187083428-300x198According to a complaint filed by the State of Illinois Securities Department Thrivent Investment has been accused of engaging in replacing its client’s existing variable annuities for new variable annuities which requiring clients to pay surrender charges and various fees that were not appropriate for the client. Thrivent Investment violated Illinois law by allegedly: (1) failing to maintain and enforce a supervisory system and adequate written procedures to achieve compliance with the securities laws; (2) failing to adequately review the sales and replacements of Variable Annuities for suitability; (3) failing to enforce its written procedures regarding documentation of sales and replacements of Variable Annuities; and (4) failing to adequately train its salespersons to variable annuity transactions.

The lawyers at Gana Weinstein LLP have represented investors in their claims against brokerage firms for unsuitable investments in annuity products.  Often times the benefits of variable annuities are 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.

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shutterstock_181783781-200x300In June 2016, Next Financial Group, Inc. (Next Financial) broker Dion Padilla (Padilla) was subject to a regulatory action brought by The Financial Industry Regulatory Authority (FINRA) alleging Padilla effected an unauthorized purchase of a variable annuity for a customer and misrepresented that the investment was not a variable annuity. According to FINRA, the customer stressed to Padilla that they did not want any of their funds invested in a variable annuity due to the high fees associated with variable annuities and because of their desire for liquidity.  But instead of following the customer’s instructions, FINRA found that Padilla presented a variable annuity application to the customer and assured him that the application was not for a variable annuity.  In addition, FINRA found that Padilla caused the customer to invest an additional $558,889 into the variable annuity by falsely claiming that the investment purchased was not a variable annuity.  FINRA found these statements to be misrepresentations that were all false and misleading.

In addition to the FINRA sanctions, Padilla has been subject to four customer complaints – many of which involve claims concerning variable annuity investments.  The law offices of Gana Weinstein LLP are currently investigating customer complaints concerning this broker.

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shutterstock_156367568-300x200In February 2017, broker Lee Rosenberg (Rosenberg) was subject to a customer complaint alleging $250,000 in damages concerning mutual funds and variable annuities.  The complaint is currently pending.  Rosenberg is currently associated with Cadaret, Grant & Co., Inc. (Cadaret Grant).  The law offices of Gana Weinstein LLP are currently investigating customer complaints concerning this broker.  According BrokerCheck the Rosenberg has a total of four customer complaint disclosures including allegations of unsuitable investments and unauthorized trading among other claims.

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.

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shutterstock_85873471-300x200Gana Weinstein LLP is investigating a customer complaint filed with the Financial Industry Regulatory Authority (FINRA) again broker Joeann Mitchell Walker (Walker). According to FINRA’s BrokerCheck records for Walker, there are several settled disclosures on her record. Walker entered the securities industry in 1992 and currently employed at Next Financial Group, Inc. She was previously employed at LPL Financial LLC (8/2006 – 4/2015), Commonwealth Financial Network (7/1998 – 8/2006), American Express Financial Advisors (6/1992 – 7/1998), and IDS Life Insurance Company (06/1992 – 7/1998).

In March 2016, a customer complaint was filed alleging Walker made unauthorized sales of different stocks, unauthorized and unsuitable purchases of variable annuities, and unauthorized mutual fund switches during the period of June 2014 to June 2015 while Walker was employed at LPL Financial LLC. The stated alleged damages were $208,764.00. The claim was settled in November 2016 for the amount of $175,000.00.

Walker has two additional previous disclosures from 2005 and 1999. In April 2005, a claim was filed alleging that Walker practiced in excessive turnovers in the client’s mutual fund account. The claim alleged damages of $30,000.00. This claim was settled in July 2005 for the final settlement amount of $9,900.00.

shutterstock_133831631-198x300Our firm’s investment attorneys are investigating a complaint filed by the Commonwealth of Massachusetts Securities Division (Massachusetts) against LPL Financial LLC (LPL) and the firm’s broker Roger Zullo (Zullo) Zullo alleging that Zullo fabricated the financial suitability profiles of numerous LPL clients, selling them scores of large, illiquid, unsuitable, high-commission variable annuities, at substantial upfront profits to himself and LPL.

The State of Massachusetts alleged that over the course of three years Zullo and LPL received more than $1,825,000 in variable annuity commissions alone and 98% of that amount represented commissions from the sale of the same annuity product – the Polaris Platinum III (B Shares) variable annuity.  The State found that Zullo bypassed LPL’s paper-thin compliance review process for these sales by fabricating client financial suitability information, such as age and liquid net worth.  Further, LPL apparently rewarded Zullo’s fraudulent practices with the honor of being included in LPL’s “Chairman’s Club” for top annuity production.

According to the State LPL was aware that Zullo repeatedly and openly sold only one product, with the same features and the same justifications, to almost every annuity client, and did nothing to stop it.  LPL was also alleged to have been aware that Zullo’s clients repeatedly incurring surrender charges and being charged high commission. According to one email from Zullo’s supervisor “It did very much seem to me that he had a pattern of switching everybody out of their annuities every 6 or 7 years and that he was getting commissions over and over again from the same clients.”  Massachusetts found that any concerns concerning Zullo’s practices were ignored.

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shutterstock_145368937-300x225The securities and investment fraud attorneys at Gana Weinstein LLP are investigating the regulatory complaint filed by The Financial Industry Regulatory Authority (FINRA) against broker Stanley Clayton Niekras (Niekras). The FINRA regulatory action alleges that Niekras recommended unsuitable variable annuity exchanges in three customers’ accounts. FINRA found that Niekras effected the annuity exchanges to benefit himself at the customers’ expense. Niekras allegedly misrepresented himself to a couple in their 90s claiming $70,000 of fees due for financial planning services. According to BrokerCheck records, Niekras has been subject to eight customer complaints and one regulatory action among other claims.

The FINRA complaint alleges that Niekras made fraudulent misrepresentations to an elderly couple in their 90s to collect more than $70,000 in estate and financial planning fees while associated with the brokerage firm MML Investors Services, LLC. FINRA alleges that Niekras didn’t have an investment advisory or financial planning agreement with the elderly couple, but he billed them for hundreds of hours of time that he supposedly spent working on their “financial future”, work that he claimed to have done over four years knowing he wasn’t entitled to the “estate planning” or “financial planning” fees he charged. In February 2013, he recommended that the children buy a particular variable annuity with the gifted assets, anticipating collecting about $75,000 in commissions from the sales. The claim is currently pending.

The most recent complaint was filed in December 2010 alleging unsuitable variable annuity recommendations in clients account from January 1995 through March 2005 causing over $5,000 in damages. The claim settled for $247,500.00.

shutterstock_185901806-300x200Our investment attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Bryon Martinsen (Martinsen) currently associated with Centaurus Financial, Inc. (Centaurus) alleging unsuitable investments, breach of fiduciary duty, misrepresentations, and fraud among other claims.  According to brokercheck records Martinsen has been subject to five customer complaints, one judgment or lien, and one employment termination for cause.  Many of the complaints involve direct participation products (DPPs) such as non-traded real estate investment trusts (REITs) and other alternative investments.

Our firm has experience representing investment fraud victims with these investments against Centaurus.  See Gana Weinstein LLP Wins Arbitration Award On Behalf of Client Against Centaurus Financial.  In that case, the Claimant alleged that the broker involved invested over $2,000,000 in exclusively high cost products and 50% of those investments were in alternative investments such as private placements, oil and gas partnerships, and REITs.  The other 50% was invested in variable and equity-indexed annuities.  Award Can Be Found Here.

All of these investments come with high costs and have historically underperformed even safe benchmarks, like U.S. treasury bonds.  For example, products like oil and gas partnerships, REITs, and other alternative investments are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed at all.  However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them and have created a large market for a failed product.  Further, investor often fail to understand that they have lost money in these illiquid investments until many years after investing.  In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.

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