Massachusetts regulator William Galvin charges Securities America over 'bait and switch' ads targeting elderly

State's top securities cop said the firm signed off on deceptive advertising about Alzheimer's

Jul 8, 2015 @ 1:53 pm

By Mason Braswell

+ Zoom
(Bloomberg News)

Massachusetts' top securities cop has charged Securities America Inc. with failure to supervise a broker who allegedly used deceptive advertising on his radio show that targeted senior citizens.

The regulator accused the firm, a subsidiary of Ladenburg Thalmann Financial Services Inc. with more than 2,000 brokers, of approving ads from a broker who “exploited the dangers of Alzheimer's disease in order to gain access to senior clients,” according to a news release from the office of William Galvin, secretary of the commonwealth.

Mr. Galvin has filed a separate complaint against the broker, Barry Armstrong, the news release said. Mr. Armstrong and his firm, Armstrong Advisory Group, manage $400 million in client assets, according to its website.

The complaint against Securities America requests a censure, undisclosed fine and a requirement that the firm retain a compliance consultant.

Mr. Armstrong, who hosts a regular radio show that runs on several AM stations, ran ads that instructed listeners to call him for “medical and support” information about Alzheimer's disease in order to get their contact information and then attempt to sell financial advice, according to the complaint.

'BAIT AND SWITCH'

Mr. Armstrong “pulled a 'bait and switch,' falsely advertising one service to obtain contact information, and then switching it out for another — financial services,” the complaint said.

“Securities America's failure to raise a single question about the content of the Alzheimer's ads and the attendant mailing materials represents an utter failure that goes to the very purpose of a compliance function,” the secretary's office said in the news release. “Securities America failed to prevent or even flag glaringly unethical conduct.”

Securities America disagrees, according to spokeswoman Natalie Haley, who said in an emailed statement that the firm “will vigorously defend against the allegations brought.”

An attorney for Mr. Armstrong, Timothy O. Egan with Peabody & Arnold, also disagreed. He said there was no false advertising. Mr. Armstrong was sincere and his personal experience with Alzheimer's motivated him to provide information as well as financial advice, according to Mr. Armstrong.

“Motivated by his personal experiences, Mr. Armstrong has endeavored to provide the public with valuable information about the disease and sound financial strategies that families can consider to protect themselves in the event they become a direct or collateral victim of the disease,” he said. “This is precisely what the ad offers and what Mr. Armstrong provided.”

NO CUSTOMER COMPLAINTS

Mr. Egan added that the ad generated no customer complaints and it was “unclear what has prompted the secretary of state's office to pursue this matter.”

“Mr. Armstrong intends to vigorously defend his good name,” he said.

Regulators have been focused on advertising and marketing to seniors as part of several recent investor protection initiatives. The Financial Industry Regulatory Authority Inc., for example, recently launched a toll-free securities help line for seniors, and has said it is focusing on marketing, including senior designations, as part of its regulatory efforts.

Mr. Armstrong has five disclosure events on his Finra BrokerCheck record, including a termination from a previous broker-dealer and three customer disputes. Two of the disputes were settled for a smaller portion of what was requested and one was withdrawn. Mr. Armstrong disagreed with the allegations behind the termination and customer disputes, according to BrokerCheck.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

B-D Data Center

Use InvestmentNews' B-D Data Center to find exclusive information and intelligence about the independent broker-dealer industry.

Rank Broker-dealers by

Upcoming Event

Oct 17

Conference

Best Practices Workshop

For the fifth year, InvestmentNews will host the Best Practices Workshop & Awards, bringing together the industry’s top-performing and most influential firms in one room for a full-day. This exclusive workshop and awards program for the... Learn more

Featured video

Events

Tech tools of tomorrow: Innovations your firms can't live without in 2020

Gadget Girl hits the tech pavilion at Pershing INSITE to see what exciting new tools advisers can't afford to miss.

Video Spotlight

Will It Last As Long As Your Clients Do?

Sponsored by Prudential

Video Spotlight

The Catalyst

Sponsored by Pershing

Latest news & opinion

Labor's Alexander Acosta and SEC's Jay Clayton tell lawmakers they will work together on fiduciary rule

In separate appearances before Senate panels, the regulators stressed the cooperation that Republican legislators and opponents of the DOL fiduciary rule are demanding.

Brian Block denies cooking the books at Schorsch REIT

Former CFO claims everything he did was 'appropriate' and 'correct.'

Interns will take on several roles at advisory firms this summer

College students are helping with client prep, firm visioning and long-term projects, among other duties.

10 funds with largest 3-year outflows

Even well-managed funds that have beaten the S&P 500’s 10.1% average annual gain have watched investors flee.

Wirehouse training programs are back

At one time, major brokerage houses ran large, expensive training programs for thousands of young brokers, and now it looks as if they are about to return to that model.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print