FINRA barred CUSO Financial Services broker Gerald Thomas Coyne aka JT Coyne following an investigation into allegations he misrepresented material features for variable annuities (VA) products in unsuitably recommending that customers use rollover funds from state retirement accounts in order to purchase VAs.
Credit Union Service Organizations, or CUSOs, are entities which may be invested in or owned by credit unions and may provide incentives to account owners to use the CUSO's services, which in turn may generate revenue from retirement investment products, which may include, amongst others, variable annuities.
This, potentially, could prompt representatives or stockbrokers associated with a CUSO brokerage firm, such as CUSO Financial Services, to recommend complex products, such as VAs, due to the added incentive for the firm and registered person—as opposed to the product's suitability for the firm's customer—while contributing to a climate in which the firm fails to adequately supervise its brokers or business conducted through credit unions.
Accordingly, a review of FINRA disciplinary records indicates no shortage of complaints against CUSO Financial Services reps.
In 2017, a customer alleged that CUSO Financial Services broker Stephen James Landersman failed to complete a liquidation and transfer of $129,000 as instructed, which caused the customer to miss out on investment opportunities.
In 2018, a customer alleged that CUSO Financial Services broker Jacqueline L. Hanson failed to disclose certain tax implications and surrender penalties that the customer would incur as the result of a variable annuity transaction that Hanson had recommended. That same customer also alleged that Hanson made misrepresentations about unit investment trusts (UITs) by falsely portraying the UIT's fees.
In 2018, the Utah Division of Securities fined CUSO Financial Services, Cetera Advisor Networks, and LPL Financial a total of $2.25 million for failing to comply with regulatory requirements regarding how broker-dealers do business with credit unions. Utah specifically found that the firms failed to follow and enforce policies and procedures and failed to supervise the business run through the credit unions.
In 2019, a customer of former CUSO Financial broker Eric Olin Shanks alleged he sold unapproved investments away from the firm through a third party, and that the firm failed to supervise its representative. This capped off a laundry list of customer disputes against Shanks alleging selling away misconduct, misunderstanding of a real estate investment trust (REIT) investment, and an incorrectly structured VA contract.
Later in 2019, a slew of customer disputes against CUSO Financial broker Felix Alberto Bartolomei Hilera alleged several millions-of-dollars in damages stemming from unsuitability, over-concentration, fraud, violation of securities laws/rules, and—for CUSO—failure to supervise.
As for Coyne, AWC #2019061332701 traced CUSO Financial's 2018 termination of Coyne (CRD #4589061)'s registration for "client service issues and violations of firm policy," barring Coyne after he indicated he would not provide requested testimony.
In February 2019, a customer dispute against Coyne alleging misrepresentation of VA features settled for $164,000, which included damages for surrender costs and market losses resulting from premature surrender of the VAs.
If you have invested with Gerald T Coyne or with any CUSO Financial Services broker or other financial adviser who misrepresented material features of a variable annuity or other complex product, or whose misconduct in selling away from the firm, and the firm's failure to adequately supervise the activities of its broker, has 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.