FINRA suspended former Park Avenue Securities (Las Vegas, NV) broker Todd Alan Shanholtzer and fined him $10,000 for mishandling customer funds related to the surrender and reinvestment of a nearly-$200,000 variable annuity product, which ended up causing the customer to incur additional tax liability. The sanction comes after Park Avenue filed an "employment separation after allegations" disclosure in 2014, alleging that Shanholtzer attempted to settle a customer complaint away from the firm via unapproved loans.
According to the findings, Shanholtzer assisted a customer in surrendering a $197,000 VA product based on the premise that if all or a portion of these funds were to be redeposited into another tax-qualified account within 60 days of the withdrawal, the customer could avoid taxes and early withdrawal penalties.
Within the 60-day period, the customer purportedly sent Shanholtzer $58,622 of the distribution and instructed him to deposit the funds in the qualified tax-deferred account, as had been previously discussed.
FINRA found that Shanholtzer subsequently failed to deposit the funds into said tax-qualified account and instead mistakenly deposited the money into the client's brokerage account, thus causing the $58,622 to be deemed a taxable distribution and an early withdrawal subject to state/federal tax.
In the second charge, that Shanholtzer settled away from the firm, investigators claimed that Shanholtzer responded to his customer's complaint regarding the misapplication of funds and dissatisfaction with earlier recommended transactions by promising to reimburse the customer in exchange for the customer not mentioning the complaint "to anyone" and to not use the word "mistake."
The settling away accusation shows that Shanholtzer directed $50,000 to the client in two installments, including a request that a corporate customer send the tax-affected client a $40,000 check.
According to FINRA, this direction constituted an unapproved $40,000 loan to a customer, the corporation owned by two of Shanholtzer's friends and a brokerage customer of both Park Avenue and Shanholtzer. At the time, Park Avenue policies prohibited its brokers from such lending agreements.
Shanholtzer's BrokerCheck report indicates several other settled customer disputes related to whole life insurance and variable annuities with granted damages totaling nearly $750,000.
If you have invested with former Park Avenue Securities broker Todd Alan Shanholtzer or with any broker or financial adviser who has attempted to settle a complaint or mistake away from the firm, or whose mishandling or misuse of funds by deposit into the wrong account or otherwise has proven harmful to your investments, interests, or tax-related prospects, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.