FINRA Sanctions James Cox for Unsuitable VA Recommendations, Outside Business Activity, Misrepresentation, Mutual Funds

Attorney Advising Disclaimer

Former Sterne, Agee & Leach, Inc. and Stifel Nicolaus & Co. broker James Keith Cox consented to FINRA's findings that he made unsuitable recommendations regarding variable annuity (VA) transactions and engaged in an unauthorized business activity outside the scope of his association with Sterne, Agee & Leach. The regulatory action follows two settled customer complaints, including a prior settlement alleging misrepresentation and unsuitable recommendation of speculative stocks, mutual funds, and non-traded real estate investment trusts (REITs).

AWC #2015047812901

According to the findings, while associated with Stern, Agee & Leach, Cox (CRD #2365633) unsuitably recommended a firm customer exchange an existing VA for a new VA, sell an existing VA to purchase two fixed equity-indexed annuities, and liquidate three additional annuities.

The report indicates that Cox's 59-year-old client cared greatly about the growth potential of income streams, and that all of the client's existing annuities provided for guaranteed minimum income equal to three times the premiums paid. By contrast, Cox's recommended variable and fixed annuities "did not offer the same income growth potential," while the liquidations provided no guaranteed income.

Furthermore, investigators wrote that the existing products offered higher death benefits than the new products and the exchange recommendations exposed Cox's client to the risk of incurring surrender charges with a new seven-year surrender period.

FINRA found that Cox netted $25,460 in commissions related to the unsuitable exchanges, and engaged in an unsuitable outside business activity by charging his client $2,500 for "consulting services" he allegedly rendered in connection with the client's desire to construct an office building for her medical practice.

After leaving Stern, Agee & Leach, Cox became associated with Stifel, Nicolaus & Co, where he remained for nearly two years until the firm discharged him over allegations of "lack of confidence after settlement of customer complaint and nondisclosure of outside business activity."

Cox's BrokerCheck report indicates two settled complaints for a combined $505,000 over allegations that Cox misled customers, including one settlement from previous firm Securities America in which a customer alleged that Cox engaged in misrepresentation and breach of fiduciary duty by unsuitably recommending speculative stocks, mutual funds, and non-traded REITs, despite the customer's "low risk" tolerance.

Two additional complaints remain pending.

If you have invested with James Keith Cox or with any broker or financial adviser whose unsuitable recommendations in conflict with your stated investment objectives and risk tolerance preferences have 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.

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