FINRA has banned Winston Wade Turner from the securities industry. The former Prudential (PRU) and MetLife (MET) broker is accused of engaging in deceptive variable annuities sales. Turner was fired from Pruco Securities, a Prudential subsidiary, in 2015. The cause of his firing was deceptive sales practices.
Now, FINRA has barred him for a number of causes, including giving false information to clients about variable annuity sales, the fraudulent misrepresentation and omission of key facts to customers about the sales, providing false information in VA-related documents, and not giving testimony to the self-regulatory organization during its probe into this matter.
According to the SRO, Turner fraudulently misrepresented and omitted material facts about VA sales and concealed that he had persuaded a lot of customers to give up existing variable annuities or other investments so that they would buy the newer VAs that he was selling. He is accused of persuading at least 12 clients to trade their existing investments for this purpose, costing them over $150K in surrender charges.
In the meantime, Turner purportedly did not tell his employers where his clients’ money was from. For example, between ’12 and ’15 he allegedly tried to get around supervisory scrutiny by splitting the exchanges into distinct purchases and sales. FINRA said that in certain instances, Turner would take client money from MetLife annuities that he had sold them and use these funds to buy Prudential annuities. FINRA also claims that he told some customers that their annuities would make them a “guaranteed” minimum yearly interest even though they were only guaranteed a minimal withdrawal rate.
In one instance, said the SRO, Turner persuaded a customer to move $108K of retirement assets into a MetLife VA. He falsely claimed that she would be making 4.5% a year when that could not be guaranteed. Turner scheduled monthly withdrawals at a 4.5% yearly rate and fooled the customer into believing she was receiving an investment return when she was actually reducing her account’s value. Another customer bought a Prudential VA at Turner’s recommendation by giving up a MetLife VA that she’d bought through him six months before. The surrender charge she had to pay was greater than $27K.
Turner also allegedly forged client signatures on applications for variable annuities, lied to firm principals, used his own email address instead of the email addresses of customers so that he would be the one to receive notices related to their accounts, and did not tell his employers about his outside business activities.
Variable annuities are popular with investors who are older and/or averse to high risk. They provide tax advantages to those investing in stock funds. However, additional supervisory scrutiny is required when it comes to trading annuities because there is usually a high commission and costs associated with such an exchange.
It was just in May that FINRA ordered MetLife to pay FINRA a $25M fine for its handling of variable annuities sales. $5M of that amount was to go back to customers. The regulator said that the firm did not succeed in helping customers properly compare older VAs and newer annuities. This caused certain clients to surrender less expensive products that had features with better benefits for the newer products.
Between, ’09 and ’14, MetLife sold at least $3B in VA replacements, making $152M in related commissions. FINRA said that MetLife occasionally overstated how much a customer’s existing VA contract cost and sometimes did not let customers know that the VA replacement they were recommending would get rid of some of the features that came with the VAs they already owned. According to the SRO, out of a sample of over 35,500 applications for replacement contracts that were handled by MetLife representatives, about 25,560 of the applications had at least one mistake understating the value of the VA contract to be replaced. FINRA accused the firm of not having a supervisory structure that was adequate enough and failing to make sure that brokers were given accurate information about replacement VA products.
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Finra bans former Prudential broker for deceptive variable annuity sales, InvestmentNews, July 11, 2016
Ex-MetLife, Prudential Broker Accused of Deceptive Conduct Involving Variable Annuity Sales, Stockbrokerfraudblog, March 3, 2016
MetLife Securities Ordered to Pay $25M FINRA Sanction Related to Variable Annuities, Stockbrokerfraudblog, May 5, 2016