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Frederick Holloway Barred for Improper Variable Annuity Exchange Recommendations & Dishonest Conduct

FINRA barred Frederick David Holloway of Holloway & Associates, Inc for improperly recommending unsuitable variable annuities (VA) exchanges to at least 39 clients, earning over $214,000 in commissions while his clients suffered over $114,000 in surrender fees. The regulator also charged Holloway with dishonest conduct, including falsifying documents, misrepresentation, and making misstatements.

In Extended Hearing Panel Decision #2016050025401, FINRA found that stockbroker Frederick Holloway (CRD #248814) recommended at least 42 separate switch transactions that investigators claimed were unsuitable for Holloway's customers and that Holloway lacked a reasonable basis for recommending the switches.

The report states that while Holloway's sales historically consisted of John Hancock variable annuities products, between 2013-2016, he began soliciting clients to switch out of their John Hancock VAs and into Transamerica X-share annuities, earning $214,989 in commissions while his customers incurred $114,470 in surrender fees.

FINRA wrote that in recommending a switch from the specific John Hancock to Transamerica VA products, Holloway recommended a more expensive product with additional riders, features, and sub-accounts that ultimately cost his customers money in the form of fees, commissions, and contract costs when his customers surrendered their John Hancock products before their surrender periods expired.

Investigators alleged that in recommending the switches, Holloway overplayed the Transamerica product's benefits and underrepresented its risks while failing to accurate portray the existing John Hancock VAs' benefits, as well as the penalties and consequences of leaving John Hancock prematurely, such as the surrender charges.

FINRA wrote that Holloway's clients "lost substantial value by leaving the Hancock product" because the guaranteed withdrawal benefit far exceeded the annuity's market value.

Finally, FINRA cited Holloway for dishonest conduct and VA sales practice violations.

For example, one customer testified to FINRA that Holloway photocopied annuity application documents to use for other VA transactions, and even forged or directed the forgery of client signatures. The former client also stated that Holloway directed her to impersonate other customers on telephone calls with financial institutions involved in the VA transactions and to take continuing education courses regarding VA business on his behalf.

In the end, FINRA charged Holloway with failing to compare the exchanged annuities, improperly emphasizing the Transamerica VA's "bonus" feature, misusing and falsifying documents, misrepresentation, making misstatement on industry forms, and withholding documents/producing altered documents during FINRA's investigation.

If you have invested with with any financial adviser or representative who has recommended exchanging your variable annuity for another product without a reasonable basis and before your prior VA's surrender period expired, thus subjecting you to excessive fees, charges, or commissions that have proven harmful to your investments or interests, please call an experienced FINRA arbitration attorney at 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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