Finra institutes disciplinary proceedings against broker over alleged improper variable annuity sales

Regulator claims Frederick David Holloway replaced lower-cost variable annuities with higher-cost ones without ensuring they were suitable or in their clients' best interests

Apr 3, 2018 @ 2:47 pm

By InvestmentNews

The Financial Industry Regulatory Authority Inc. has instituted disciplinary proceedings against Frederick David Holloway, the owner of Holloway & Associates Inc., to disgorge alleged ill-gotten gains from recommendations he made to clients to exchange their variable annuities.

Finra alleges that Mr. Holloway, whose firm is based in Easton, Md., recommended that customers exchange one deferred variable annuity contract for another without having a reasonable basis for his recommendations.

In the three-and-a-half years between January 2013 and June 2016, Finra said that Mr. Holloway persuaded clients to make 43 transactions in which they exchanged lower-cost VAs for high-cost VAs "without making adequate efforts to ensure that the proposed exchanges were suitable for, and in the best interests of, his customers." Mr. Holloway, who was the sole registered rep in his office, derived 70% of his income from VA sales, according to Finra.

The regulator also charged that between January 2010 and September 2016, Mr. Holloway falsified or inappropriately altered VA transaction paperwork. It said that he had clients sign uncompleted paperwork, which he and his assistant filled in later and/or photocopied for use in other transactions. Finra also charged him with forging or directing his assistant to forge client initials to make changes to paperwork.

Beginning in 2011, Finra also said that Mr. Holloway directed his assistant to impersonate clients and employees of an insurance company in telephone conversations regarding VA transactions.

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