According to Reuters, two former brokers for MetLife Securities Inc, Christopher Birli and Patrick Chapin, have been accused of orchestrating a scheme to generate inflated commissions by switching clients’ variable annuities. Over the course of seven years the two brokers reportedly may have recommended clients switch approximately $21 million in annuities. Allegedly, the brokers recommended clients switch a variable annuity in their retirement account with a new annuity held in an IRA.
The civil complaint against the two MetLife broker’s was filed by the Financial Industry Regulatory Authority (FINRA), the securities industry watchdog. According to Reuters, “Birli and Chapin structured the deals in a way to circumvent a MetLife policy that generally prohibited exchanging the two types of variable annuities in the transactions, FINRA alleged.”
FINRA complaint (No. 2012032120001) alleges that Birli and Chapin submitted false and misleading paperwork, and made misrepresentations and material omissions to Metlife personnel to conceal their misconduct. If true, the alleged two-step transaction scheme would have sidestepped the firms internal exchange program and subjected clients to a new seven-year surrender charge schedule.
Brokers have to have a “reasonable grounds” for believing an investment recommendation is suitable for a client. Investment recommendations should be in line with the client’s age, risk tolerance, liquidity needs and investment objectives, among other factors. Recommendations that are misleading and/or expose clients to unnecessary risks may violate securities FINRA rules and regulations.
According to FINRA’s BrokerCheck, both Birli and Chapin worked with MetLife from 2001 until 2012.
The foregoing information which has been reported by Reuters and which is available on the FINRA website is being provided by The White Law Group.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at www.WhiteSecuritiesLaw.com.