If you ever wonder whether all the rules and policies really matter, they DO! Let's look at some recent FINRA enforcement cases:
- Annuity related: An individual was fined $10,000, suspended for 1 year, and ordered to pay deferred restitution to customers in the amount of $25,436. The individual recommended variable annuity exchanges without having a reasonable basis to believe the recommendations were suitable. The individual incorrectly stated in his exchange documentation that the replacement variable annuity has lower fees, when, in fact, the replacement annuity caused customers to increase their base expenses.
- Borrowing/Lending related: An individual was suspended for 3 months for borrowing $250,000 from a customer without disclosing the loan to his member firm or receiving permission to accept it.
- Impersonation of a Client/Discretion/Email related: An individual was fined $10,000 and suspended for 3 months for impersonating a customer on four telephone calls to an annuity provider in order to obtain paperwork to facilitate a transaction for the customer. In addition, the individual exercised discretionary authority in a non-discretionary account by reallocating a variable annuity’s subaccount allocation without the customer’s consent. The individual also used two personal email accounts to conduct securities business by sending investment summaries to customers from his personal email address.
- Private Securities Transaction (PST) related: An individual was fined $10,000 and suspended for four months for participating in a private securities transaction by selling $400,000 in limited partnership interests for a retail business franchise to six investors without prior disclosure to, or approval from, his member firm. The investors were NOT brokerage customers of the firm. The individual had previously completed an annual compliance questionnaire in which he did not disclose to the firm he had been involved in a private securities transaction.
Please contact the Prosperity Network Compliance Team with any questions: compliance@prosperityadvisors.com or 913-529-5500 Option 2.
Internal Use Only
Attachment: Disciplinary Actions June 2025