NOTE: Stipulations of Fact and Consent to Penalty (SFC); Offers of Settlement (OS); and Letters of Acceptance Waiver, and Consent (AWC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.
Dwight John Schaefer AWC/2008012636401/December 2010
Despite knowledge of his member firmís change in policy regarding the sale of equity indexed annuities that all business be sold and processed through the firm and representatives were only to sell specific annuities offered by firm-approved annuity companies, Schaefer sold annuities to customers, including firm customers, and did not sell or process the transactions through his firm and did not provide written notice to the firm of his intention to engage in outside business activities. The sales totaled approximately $1,856,597, and Schaefer was compensated approximately $93,163. Schaefer completed an annual questionnaire in which he falsely answered that he did not offer or sell equity indexed annuities to his clients.
Dwight John Schaefer: Fined $5,000; Suspended 4 months
Edward William Overdyke AWC/2008014701201/July 2010
Overdyke engaged in outside business activity and failed to give prompt written notice to his member firm. Overdyke received approximately $22,100 in compensation for selling equity indexed annuities through a life insurance company to public customers.
Edward William Overdyke : Fined $5,000; Suspended 3 months
Polychronis engaged in outside business activities without giving prompt written notice of those activities to his member firm. Polychronis wrote annuity business away from his firm, including sales of fixed annuities and an equity-indexed annuity. When his firm questioned Polychronis on various occasions, he initially failed to disclose his outside activities and then later under-reported its scope by falsely claiming that it had been limited to a single transaction.
John Andrew Polychronis : Fined $5,000; Suspended 6 months
Boyer engaged in outside business activities by participating in the sale of equity-indexed annuities while registered with his member firm, and received approximately $7,622.25 in commissions as a result of the sales. Boyer failed to provide prompt written notice to the firm regarding the outside business activities and signed an attestation form acknowledging that he was required to submit sales of equity-indexed annuities to be processed by the firm.
Crocker engaged in outside business activities for compensation and failed to provide prompt written notice to his member firm, but eventually notified his supervisor of the transactions a number of years later. Crocker participated in referring a customer to another firmís registered representative for the purpose of purchasing equity-indexed annuities and received compensation for the transactions.
David Bigelow Crocker : Censured; Fined $10,000 (includes $3,500 disgorgement); Susendped 20 business days
Groth sold equity-indexed annuities, with a face-value of $4,800,000, issued by carriers that were not approved by the firm for sales by its registered representatives, and earned approximately $524,142 in connection with the sales. This compensation was outside the scope of Grothís relationship with the firm, and he accepted it without providing prompt written notice to the firm in a form the firm required. Groth completed firm documentation requesting information concerning any outside business activity and did not disclose that he was selling annuities issued by carriers that did not have selling agreements with the firm.
Jason Allen Groth: Fined $5,000; Suspended 90 days
Batstone participated in the sale by another registered representative to Batstoneís customers at the firm, of equity indexed annuities issued by companies with which Batstone was not an appointed agent. Batstone's customers were not aware that the firm did not have selling agreements with the issuing companies and did not approve its representativesí sale of the subject products, or that the registered representative was acting as the authorized agent of record. Batstone participated in the sales by discussing general features and benefits of the equity indexed annuities, facilitating the transactions, and by either introducing the customers to the representative or providing their contact and financial information to the representative to complete the transactions.
Martin David Batstone: Fined $5,000; Suspended 10 business days
Rob William Friemoth Jr. AWC/2007010328201/May 2010
Friemoth engaged in outside business activities, for compensation, and failed to give his member firm prompt written notice.Friemoth sold equity-indexed annuities on an insurance companyís behalf after his firm had discovered that he had sold an equity indexed annuity that was not on the firmís approved list and after it had requested that he not proceed with any additional such sales.
Rob William Friemoth Jr.: Fined $5,000; Suspended 2 months
Kenneth Ray Prevett Jr. AWC/2008014399401/April 2010
Prevett engaged in an outside business activity by selling EIAs to his member firmís customers without giving prompt written notice of the sales to his firm. Prevett received approximately $77,700 in compensation for selling the EIAs.
Kenneth Ray Prevett Jr. : Fined $5,000; Suspended 3 months
Delott engaged in improper seminar, training and sales activities in retirement planning workshops, fact finders meetings, annuity training and a breakout session at an insurance industry expo. Delott failed to disclose that he received commissions for the sale of EIAs and falsely created the appearance that people were signing up for a fact finders meeting by asking existing customers to come to the front room at the conclusion of a workshop.
Delott recommended and instructed attendees at annuity training sessions and an expo breakout session to make false, misleading, unwarranted or exaggerated statements in the sale of EIAs and other financial products; to omit material facts; to present information concerning EIAs that is not fair and balanced; and to use improper and high-pressure sales strategies. Delott made exaggerated, unwarranted and misleading statements, and statements that were not fair and balanced and did not provide a sound basis for the evaluation of facts during his workshops, fact finders meetings and annuity training classes.
In connection with his marketing of EIAs, securities and insurance and annuity training, Delott used materials that his member firm had not approved. FINRA found that Delott did not disclose his member firmís name on invitations, or failed to disclose it in a prominent manner, and engaged in outside business activities without disclosing the activities to his firm or seeking its approval.
Steven Howard Delott: Fined $35,000; Suspended 6 months
William Robert Colston (Principal) AWC/2008012057401/April 2010
William Robert Colston engaged in outside business activities in that he acted on behalf of insurance companies not affiliated with his member firm and engaged in sales of equity-indexed annuities (EIAs) to customers for compensation of approximately $111,000, and failed to provide prompt written notice to his member firm. Colston engaged in these transactions after his firm specifically instructed him that he was prohibited from selling EIAs, verified that he understood that his firm did not allow the sale of EIAs and agreed he would not sell them going forward.
William Robert Colston (Principal): Fined $10,000; Suspended 3 months in all capacities
FINRA, FinCen, Networks, Authorities, Priorities, Statements, Guidance, AML, CFT, BSA, and NBFI (BrokeAndBroker.com Blog)http://www.brokeandbroker.com/6108/finra-fincen/Now we take that one step from the sublime to the ridiculous. FINRA actually believes that it is somehow furthering its regulatory mission when it publishes a Regulatory Notice about Fin... Read On