FINRA Charges Walter J. Marino with unsuitable advice, misrepresentation and falsification of records.
In November we told you that Walter J. Marino of Benjamin Securities, Inc. allegedly solicited teachers to invest in high cost low quality annuities with their retirement savings. The Legend Group was alleged to be the provider of the investments all these teachers held, according to an article in the New York Times.
FINRA alleges Marino recommended that two clients purchase variable annuity replacements in 2014 despite one client’s 20% returns after two years and the other client’s 69% returns over five years, investigators said. Then he concealed the fact that both transactions were exchanges, according to FINRA.
Walter J. Marino was working for Legend Equities in Palm Beach Gardens in 2014, the time of the transactions investigated by FINRA. Legend Equities discharged him in 2015 because he “represented as a non-replacement VA sale was in fact a replacement.”
According to FINRA Broker Check, Marino has sixteen disclosure events and twelve customer complaints. Allegations include misrepresentation and excessive commissions. Marino is not currently registered.
Marino’s former clients have been awarded close to $500,000 in nine settlements for recommending unsuitable and risky variable annuities, according to FINRA.
Improper Recommendation of Variable Annuities
The White Law Group continues to investigate firms that improperly recommend variable annuities to investors. One of the most common problems we see in litigating these investments is that financial advisors often misrepresent the key benefits of a variable annuity contract to induce their customer to purchase the investment, (See Overview of Variable Annuity Securities Fraud Cases.)
One benefit that we see misrepresented a lot is the “guaranteed minimum income benefit” rider, also called the “living performance guarantee.” Different providers have different names for this rider, but essentially the feature provides guaranteed income regardless of actual performance. The rub is that brokers often gloss over or fail to mention that the rider requires that the contract be kept in force for a long time, often ten years or more, before it can be utilized.
Additionally, the investor must annuitize the contract to get the guarantee. I.e. the investor must transfer the principal to the carrier in exchange for the guaranteed payments. The insurance company is then betting the client dies before the full value of the funds has been paid out. The real problem for the investor, though, is that these riders are extremely expensive and rarely does the math work in the favor of the investor.
Financial advisors have two main obligations to their clients. The first is a duty to perform due diligence on any investment they recommend. The second is to ensure that any investment recommendation made is appropriate for the client in light of that client’s age, investment experience, investment objectives, and net worth.
If a broker or brokerage firm makes a recommendation that is unsuitable or without performing adequate due diligence they may be responsible for any losses in a FINRA arbitration claim.
If you believe that you were sold a variable annuity improperly, please call the securities attorneys of The White Law Group at 888-637-5510 for a free consultation.
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 Franklin, Tennessee.
For more information on The White Law Group, visit https://www.whitesecuritieslaw.com.