At Hauserís request, firm customers borrowed a total of $202,000 from the cash value accumulated in whole life insurance policies that Hauser previously sold to them. Hauser then borrowed the funds from these customers, pursuant to secured (as to two of the loans) and unsecured (as to one of the loans) promissory notes providing for annual interest. Hauser has not made interest or principal payments on the notes.
Hauser's firmís WSPs prohibit associated persons from engaging in borrowing or loaning funds with a customer, unless the customer is an immediate family member and the firm provides prior written approval; none of the customers from whom Hauser borrowed funds were members of Hauserís immediate family, and Hauser did not seek or receive prior approval for the loans.
Pedigo submitted a fixed annuity contract for his customer with an insurance company. The insurance company issued the annuity contract and sent it to Pedigo in accordance with its selling agreement. The insurance company never received the customerís executed annuity contract confirmation (ACC); and, as a result, mailed letters to Pedigo numerous times requesting that he have the customer sign and return the ACC.
Pedigo informed the insurance company that the customer was deceased and requested paperwork to submit a death claim. According to the insurance company, it never received the death claim paperwork. After receiving a surrender request form that same day, the insurance company contacted Pedigo to inform him that a full surrender could not be processed because the customer was deceased. Amazingly, about a year after the customer had passed, Pedigo falsely informed the insurance company that the customer was still alive. Pedigo faxed the insurance company an ACC which the customer purportedly signed and dated almost 20 days after the customer had died.
Chase wrote fictitious fire insurance policies and fictitious life insurance policies while an insurance company employed him; these policies were written without the insuredsí knowledge and consent.
With regard to the fire insurance policies, in most cases, the billing notifications were sent either to the home of Chaseís relatives, Chaseís former insurance agency address or his residence; as a result, the purported insureds did not receive any communications from the insurance company concerning these policies. By writing these policies, Chase received compensation of approximately $2,725 and he qualified to remain on the insurance companyís career program.
Chase failed to respond to FINRA requests for information and documents.
Haeffele was appointed as a co-trustee for a trust and, wrongfully and without authorization, disbursed funds to himself from the trustís mutual fund accounts and checking accounts.
Haeffele was appointed as a co-trustee for another trust, which owned life insurance policies for which Haeffele was the agent of record on, and Haeffele, wrongfully and without authorization, disbursed funds to himself from the life insurance policies held in the name of the trust. Haeffele used the funds from both trusts for his own benefit, thereby converting assets from the trusts.
As trustee, Haeffele received account statements for the first trust from mutual fund issuers, but only provided the trustís creators false and misleading account statements and related correspondence that he created on his computer for the trust. The fabricated account statements and correspondence grossly overstated the value of the trustís assets.
Haeffele failed to provide written notice to his member firm that he had been serving as a trustee for the trusts, and had been receiving compensation for such activities. In addition, Haeffele completed a series of questionnaires submitted to the firm in which he failed to disclose that he was serving as a trustee and receiving compensation.
Cheviron wrongfully converted a total of $75,331.08 from customers by withdrawing funds from a customerís bank account and then took the funds to another branch of the bank, where he deposited the funds into his own personal account. Ultimately, he used the customerís funds to make home improvements to his personal residence.
Chevironís member firm compensated the customer for the funds wrongfully taken from her account; Cheviron has not reimbursed his firm.
Cheviron caused other customers to sign distribution requests to an insurance company with instructions to mail checks to Chevironís attention at several banks and his personal residence. Upon receipt, Cheviron deposited these funds into his personal bank accounts and used the funds for his personal benefit. In an effort to conceal that he was the beneficiary of the customersí funds, Cheviron created false account statements, which he provided to one of the customers.
Christensen sold approximately $650,000 in a companyís promissory notes to customers without providing his member firm with written notice of the promissory note transactions and receiving the firmís approval to engage in these transactions.
Based upon expected interest payments from the promissory notes, some of the customers also purchased life insurance policies from Christensen and another registered representative the firm employed. These customers expected to use the promissory note interest payments to pay for the life insurance premiums.
Christensen received direct commissions from the company related to the sale of the promissory notes to customers and received commissions from the sale of life insurance products to the customers, who intended to fund those policies with the interest payments from the promissory notes.
The company defaulted on its obligations and the customers lost their entire investment. The customers who also purchased life insurance based upon the expectation that they would receive interest payments from their investment relinquished their policies and the firm compensated them for the premiums paid, but the customers did not receive any reimbursement for the investments in the company that sold the promissory notes.
Christensen completed a firm annual compliance questionnaire, in which he falsely stated that he had not been engaged in any capital raising activities for any person or entity; had not received fees for recommending or directing a client to other financial professionals; had not been personally involved in securities transactions, including promissory notes, that the firm had not approved; and had not assisted a client with an application for investments not available through the firm or contracted or otherwise acted as an intermediary between a client and a sponsor of such investments without the firmís prior approval.
Finally, Christensen failed to respond to FINRA requests for documents and testimony.
Sheedy engaged in private securities transactions without providing written notice to, or obtaining written approval from, his member firm.
Sheedy facilitated two firm customersí investments in securities issued by an entity in the form of investment agreements.Sccording to the investment agreements the entity issued, the company invested in and brokered life settlement contracts. Sheedy participated in the customersí investments by reviewing the customersí investment agreements, providing the customers with wiring instructions for the issuer, providing status updates to the customers regarding their investments and telling the customers to call him if they had any questions about their investments.
Sheedy utilized an unapproved personal email account to communicate with the customers.
The customers invested a total of $350,000, and pursuant to the terms of the customersí investment agreements, the customers were to receive return of their principals plus a total of $42,000 within five days of the end of their investment period for which certain life settlement contracts were invested. Neither of the customers received the return of their investment principal or the promised investment returns. All of their funds were lost all of their funds were lost.
Eppler disclosed his outside business activities to his member firm as part of a branch office review and reported that he was engaged in the sale of new and renewal sales of a particular companyís insurance products that his firm did not approve for sale. In response to the disclosure, Eppler was informed, orally and in writing, that he should discontinue selling those products and he could only receive renewals on prior sales.
Eppler was sent an email reminding him of deficiencies found in the branch examination, which included his sale of the particular insurance products, and that he was to discontinue selling the insurance products. Eppler responded to the email by advising the firm that all of the deficiencies had been corrected, which was untrue because Eppler continued to sell the non-approved insurance products and received $967.79 as commissions from the sales.
Epplerís branch office was again reviewed, and as part of that review, Eppler reported his outside business activities and reported that he was receiving commissions only for renewals of the non-approved insurance products, which was false, in that Eppler continued to sell new non-approved insurance policies, for which he received compensation. Eppler engaged in these activities without giving prompt written notice to his firm that he was continuing to sell new non-approved insurance policies.
Bartlett signed customersí names to documents related to purchases of mutual funds and insurance products without authorization. Although the customers authorized Bartlett to purchase the securities or insurance products for them, only one of the customers orally authorized Bartlett to sign his name.
Bartlett signed customersí names to new account applications, client profiles, risk questionnaires, insurance applications and transaction confirmation forms. In one instance, Bartlett forged a customerís name because he was concerned that he would lose a substantial commission if he went back to the customer to obtain her signature on a form.
Karn allowed a customer to sign relativesí names on life insurance applications, and before Karn submitted them for processing, she signed the insurance applications and certified that she had witnessed each of the proposed signatures on the insurance applications. Karn falsely certified on the Representativeís Information Supplement document for each insurance application that she had personally seen each proposed insured at the time the application was completed.
One of Karnís clients completed an application to purchase a municipal bond fund by signing her name on an electronic signature pad, and later that same day, Karn signed the clientís name on the electronic signature pad and thereby affixed the clientís signature on an application without the clientís authorization, consent or knowledge. The application Karnís member firm processed and sent to the client reflected the signature Karn had affixed rather than the clientís authentic signature. When the firm questioned Karn about the authenticity of the clientís signature, Karn initially stated it was the clientís original signature, but when questioned further, admitted she had signed the clientís name and in doing so, Karn misled her firm during its internal investigation into a customer complaint.
Even though she was a licensed insurance producer, Ryerson signed her own name as the ďproducerĒ or ďagentĒ on annuity application transfer and exchange forms when, in fact, she was not the producer or agent on those particular applications. Ryerson signed the documents for the benefit of a person who, as Ryerson knew, sought to conceal his identity from his member firm as the true agent on those documents. Ryerson misidentified herself as the ďproducerĒ or ďagentĒ on annuity application transfer and exchange forms for other insurance agents as well under similar circumstances.
Ryerson failed to produce some of the information FINRA requested.
Jefferies signed or traced customersí signatures on applications to purchase life insurance or critical care insurance through an electronic application system available at his member firm, without the customersí knowledge or consent and contrary to firm policy. Jefferies submitted life insurance applications for fictitious customers and, along with creating fictitious customer names and addresses, he created fictitious social security numbers, driverís license numbers and other information about the purported customers. Jefferies submitted these applications for fictitious customers in order to give the appearance that he was meeting his required production for insurance policies sold. When Jefferies submitted each of the fictitious applications, he listed fictitious credit card numbers made up of all zeros for the initial premium payment, knowing that the credit card would be rejected with no payment being collected or the customers billed, while at the same time, his firm would give him immediate credit for submitting a new insurance policy.
When questioned by his manager about the applications, Jefferies initially denied having any knowledge of the practice and when later pressured by his manager, he then offered that newer agents may have been engaged in the activity. Only after his manager noted that almost all of the applications with zeros for credit card numbers were submitted from his office that Jefferies admitted to his misconduct, stating he did so because the applications would be credited to his production numbers more promptly that month. In addition, Jefferies also admitted that he had submitted applications using fictitious names and other information.
Takeuchi participated in private securities transactions by selling a viatical settlement companyís viaticals to outside investors while he was registered with his member firm. Takeuchi did not provide notice to, and receive approval from, the firm before participating in these private securities transactions; the firm also prohibited the sales of viaticals. Takeuchi earned approximately $4,400 as a result of his viatical sales and never gave the firm any notice, written or otherwise, that he had sold viaticals to outside investors.
Takeuchi repeatedly misrepresented and omitted material information to the firm concerning his sales of viaticals when he completed the firmís annual compliance meeting questionnaires and checked ďNo,Ē implying that he had not engaged in any activity involving viatical contracts.Takeuchi made false attestation to the firm when he executed a firm document that he had not participated in the sale or solicitation of viaticals. Takeuchi knew that his written statements to the firm regarding his viatical sales were inaccurate or incomplete.
Charles sold variable universal life insurance products to his member firmís customers and after leaving the firm, Charles remained the assigned representative on the accounts and received modest annual ďtrailing commissions.Ē Charlesí former firm asked him to pay a ďsingle appointmentĒ fee of $100 to the firm or submit customer-signed ďTelephone or Electronic Transaction AuthorizationĒ forms for him to continue to service the customersí accounts. Charles chose to do neither, but when he realized the deadline was approaching, he signed the customersí names on the authorization forms without the customersí permission and sent them to the firm via facsimile.
One of the customers complained that Charles had not being authorized to sign her name on the authorization form; therefore, Charlesí former firm notified Charles and his present firm of the customerís allegation and asked Charles for a written explanation. During Charlesí present firmís investigation into the complaint, he made misstatements, verbally and in writing, to the firm, denying forging the signatures and fabricating a story to prevent the firm from discovering his misconduct. Also, Charles subsequently admitted to the firm that his alibi was false and that he signed the customersí names without authorization.
Kruse entered into a settlement agreement regarding a customer complaint without authorization from, and without notifying, his member firm.
Kruse sold a customer a variable life insurance policy which required payment of monthly premiums by automatic withdrawal from the customerís bank account. Thereafter, the customer complained to Kruse that he had not been aware of the monthly withdrawals from his bank account and about the performance of the policy. The customer threatened to direct his complaint to the state insurance commissioner if Kruse did not resolve the situation to his satisfaction; Kruse then paid the customer $4,000 to settle the complaint.
- Accredited Investor
- Affirmative Determination
- Annual Compliance Certification
- Annual Compliance Meeting
- Away Accounts
- Best Efforts Offering
- Blank Forms
- Campaign Contributions
- Check Kiting
- Clearing Agreement
- Confidential Customer Information
- Contingency Offering
- Continuing Education
- Corporate Credit Card
- Credit Cards
- Customer Protection Rule
- Debit Card
- Do Not Call
- Due Diligence
- Electronic Communications
- Electronic Storage
- False Statements
- Finder Fees
- Foreign Language
- Form ADV
- Guaranteeing Against Losses
- Hedge Fund
- Heightened Supervision
- Insider Trading
- Installment Plan Contracts
- Instant Messaging
- Investment Advisor
- Joint Account
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- Material Change Of Business
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- Money Laundering
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