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Jonathan W. Evans & Associates Files FINRA Claim Against Centaurus Financial and Broker Ralph Quintana over Unsuitable Variable Annuity, Class "C" Mutual Funds

The Law Offices of Jonathan W. Evans & Associates filed a FINRA claim against Anaheim-based Centaurus Financial and broker Ralph Quintana II, alleging misconduct in a couple's IRA account held at the Upland, California location where Quintana worked, after Quintana purportedly convinced his clients to liquidate an existing well-diversified portfolio held at another firm in order to fund what would become a series of unsuitable recommendations, including an over-concentration in just two mutual funds. The claim alleges misrepresentation and omission, suitability violations, negligence, breach of fiduciary duty, and the firm's failure to supervise Quintana, a troubled broker with a history of disclosures and complaints mainly related to Variable Annuities and life insurance policies.

For instance, the claim alleges that Quintana's sole purpose for liquidating the already-existing portfolio in order to invest in new complex products was to generate fees and commissions.

Quintana (CRD #284803) previously served as respondent in a $230,000 settlement with customers who accused him of churning and misrepresenting the sale of two life insurance policies. In 2013, prior firm LPL Financial permitted him to resign, rather than be fired, due to the firm's "concerns regarding Variable Annuity sales practices." In 1997, Quintana was part of a large settlement in which 124 plaintiffs alleged that the defendants, including Quintana, engaged in a marketing fraud scheme pertaining to insurance policies.

According to the present claim, Quintana persuaded his clients to invest an entire IRA nest egg in the Nationwide Market Flex Variable Annuity ("Nationwide VA"), recommending liquidation of an existing portfolio held at another firm in order to fund the Nationwide VA. Quintana allegedly exploited his client's lack of investing knowledge and sophistication, additionally making selective representations and omitting material facts and features of variable annuities, including costs and expenses.

Among the facts Quintana allegedly misrepresented, omitted, or otherwise failed to accurately disclose were the Nationwide VA's requirement that life insurance be purchased regardless of whether the client actually needs it, that this purchase adds a significant cost that negatively impacts overall rate of return, that the Nationwide VA itself has a high operating expense for its mutual fund component, that lack of liquidity can result due to high surrender charges that may make selling off a costly endeavor, additional fees and tax considerations, and the product's complexity.

When Quintana's client later attempted to communicate dissatisfaction regarding the Nationwide VA, Centaurus Financial itself allegedly promised an investigation which never transpired, thus stringing Quintana's client along for several months, resulting in even greater losses.

As for the Class "C" mutual funds, Quintana allegedly purchased mutual funds from issuers Rydex (Rydex Biotech and Rydex Health Care), Oppenheimer, and Prudential—all of the Class "C" variety—and using proceeds from liquidation of the client's portfolio previously held at another firm.

The claim alleges that the new portfolio Quintana assembled at Centaurus Financial was less diversified, and saddled with unnecessary fees, commissions, and compensation, such as higher fees associated with purchasing Class "C" mutual funds as opposed to other share classes, including 12 b-1 fees and backend load expenses if the shares were sold within a year.

Furthermore, Quintana allegedly engaged in short-term trading of these Class "C" mutual fund shares, even though they were designed to be held long-term, resulting in both a frontend and backend fee due to the short-term selling.

As for the IRA, which at the client's previous firm was already well diverse, Quintana allegedly put 100% of the Centaurus IRA portfolio in Rydex Biotech and Rydex Health Care funds, resulting in both an inexplicable concentration in just two products, but additional losses as a result of not just fund performance, but fees and other unnecessary expenses, as well.

The claim seeks over $200,000 in damages for losses and excessive expenses incurred as a result of Quintana and Centaurus Financial's misrepresentation, unsuitability, negligence, supervisory failures, and breach of fiduciary duty.

The FINRA arbitration claim remains pending at this time.

If you have invested with Centaurus Financial or its broker Ralph Quintana II, and have suffered losses as a result of unsuitable recommendations, over-concentration, or the incurrence of excessive fees and commissions, such as surrender fees or backend load expenses due to inappropriate short-term trading, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.

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The Law Offices of Jonathan W. Evans & Associates - California Securities Fraud Attorney
Located at 12711 Ventura Boulevard, Suite #440 Studio City, CA 91604. View Map
Phone: (800) 699-1881 | Local Phone: (818) 760-9880.
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