The Financial Industry Regulatory Authority has suspended broker Adam Spencer Deane of Naples, Florida and fined him $25,000 for allegedly recommending and executing a variably annuity (VA) replacement contract for a customer who lived in a state Deane was not licensed to sell products in, New York. Furthermore, FINRA found that Deane's firm, Merrill Lynch, Pierce, Fenner & Smith, Inc., did not offer that specific VA to New York residents whatsoever.
According to FINRA's investigation, in September of 2010, Deane recommended and transacted a VA replacement contract for a 73-year-old retired woman who lived in Buffalo, New York. After successfully recommending she exchange a $75,000 fixed annuity for a deferred VA, Deane accessed Merrill Lynch's web-based Annuity eXpress system to effect the transaction.
However, because Annuity eXpress also fact-checked information and disallowed improper sales and other activities, it rejected Deane's request on the grounds that Merrill Lynch did not offer deferred VAs to New York residents.
According to the Complaint, Deane subsequently re-entered the information into Annuity eXpress, this time improperly reporting the 73-year-old customer's state of residence as "Florida." As the firm did offer the VA to Florida residents, the system approved Deane's falsified electronic paperwork and permitted the processing of the transaction.
During a review of its electronic paperwork, Merrill Lynch determined it could not honor Deane's request, as the customer was not actually a Florida resident. Because Merrill Lynch discovered this altered transaction record and found that Deane was not properly registered to sell insurance in the state of New York at the time of the transaction, the firm terminated Deane's employment.
One month after engaging in this alleged misconduct, Deane applied for a license to sell insurance in New York, acquiring this license another month later, or approximately two months after the alleged misconduct.
Because rules, regulations and laws may vary from state-to-state, many products and transactions require a broker or firm to possess a specific license to conduct business within a State. Before conducting business with a broker from out-of-state, investors should use FINRA BrokerCheck, available on the FINRA website, to ensure the broker and firm are properly registered with the regulatory agency and in the correct state(s).
If you have attempted to secure a variable annuity or other instrument and this request was ultimately denied based on broker or financial advisor misconduct—such as a failed attempt at an out-of-state sale—and this has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.