The Financial Industry Regulatory Authority has put out a disciplinary complaint against Walter Marino. The former broker worked for Legend Equities Corp. in Palm Beach Gardens, Florida at the time he allegedly facilitated variable annuities sales that were unsuitable for two of his older clients. According to the regulator, Marino recommended exchanges of non-qualified VAs to the customers without having reasonable grounds to guide them toward these investments.
FINRA said that Marino earned about $60K in commissions. Meantime, the customers lost over $82K because of surrender charges they were forced to pay and they did not benefit financially. Not only that but because Marino didn’t apply the tax-free exchange provision of the Internal Revenue Code, the customers ended up with substantial tax liabilities.
Now, the regulator wants Marino to disgorge his ill-gotten gains and pay the customers full restitution for the variable annuity fraud.
For many older investors, investing in more conservative, low risk securities is best for their portfolio. That’s why it’s important that brokers do not recommend investments that are not in line with a customer’s goals and the degree of risk they can handle. For many elderly investors, this means not making investments that could place their savings and/or retirement fund in jeopardy.
Senior Investor Fraud
Unfortunately, senior investor fraud continues to be a huge problem and every year there are older investors who are subject to losses because their financial representative was negligent, careless, or purposely sought to defraud them. FINRA has been trying to help older investors with its Senior Helpline, which recently marked its 2-year anniversary. It has issued $4.3M in voluntary reimbursements to people that have called the phone number 1-844-574-3577.
The purpose of the helpline is for senior investors or persons taking care of an older person to call about concerns regarding investments and brokerage accounts. Topics of the calls have ranged from different financial services products to questions about investment account statements, investor tools, resources, and concerns about possible fraud, unsuitable recommendations, and elder financial abuse by both securities industry members and individuals outside of the industry. FINRA said that through the helpline it has learned about binary options issues, IRS scams, and other problems, and it has been able to warn investor about them.
Last month the Securities and Exchange Commission approved FINRA’s rule proposal dealing with the financial exploitation of older people. Under the new rule, firms will have to reasonably do what it can to get the name and contact information of a trusted third party contact person for older customers’ accounts. They also will be allowed to temporarily hold of on disbursing securities or funds if they suspect financial exploitation is taking place.
At Shepherd Smith Edwards and Kantas, LTD LLP, our senior financial fraud lawyers work with older investors and their families in trying to get back their funds caused by broker fraud, broker-dealer fraud, investment adviser fraud, mutual fund fraud, variable annuity fraud, or another type of securities fraud.
Finra issues complaint against broker for unsuitable variable annuity sales, InvestmentNews, April 26, 2017