Finra fines former LPL rep $5,000 over viatical sale

LPL terminated Scott Klor in 2017 for violating firm policies

Apr 5, 2019 @ 1:18 pm

By InvestmentNews

The Financial Industry Regulatory Authority Inc. has fined Scott Klor, a former registered representative who had been affiliated with LPL Financial, $5,000 and suspended him for 14 months for his involvement in a lie insurance scheme not disclosed to LPL.

(More: Texas adviser barred for fraudulent sales of life settlements)

Finra said that Mr. Klor, who is no longer affiliated with a securities firm, participated in a private-securities transaction by soliciting investors to purchase a variable life insurance policy through a specially-formed LLC for approximately $1.4 million. For his participation in this transaction, Mr. Klor received a 4% interest in the LLC.

Mr. Klor failed to notify LPL of his participation in the transaction as required by regulation, Finra said.

LPL terminated Mr. Klor on May 9, 2017, saying that Mr. Klor violated firm policy regarding private securities transactions.

Finra said that in late 2012, Mr. Klor solicited investors to purchase a variable life insurance policy on the life of an elderly individual with a terminal illness. The transaction was structured as a viatical settlement, in which investors purchased the life insurance policy for an amount that exceeded the policy's surrender value but was less than the expected death benefit. With Mr. Klor's assistance, Finra said, the investors formed a limited liability company to purchase the policy for approximately $1.4 million.

(More: Investors denied judgment in failed viatical scheme)

For several years, while the insured remained alive, the LLC made quarterly premium payments on the policy and interest payments on the loan. When the insured passed away in August 2017 the death benefit on the policy was worth less than the total amount invested, and each of the five majority members of the LLC lost over $200,000.


What do you think?

View comments

Most watched


Finding innovation in your firm

Adam Holt of AssetMap explains how advisers understand they need to grow, but great innovation may be lurking right under your nose.


Finding your edge from Tony Robbins

Guru Tony Robbins has helped a lot of people, but armed with his psychology Financial Advisor Josh Nelson has helped his practice soar.

Latest news & opinion

Redtail CRM data breach exposes personal client data

The information exposed includes names, addresses, dates of birth and Social Security numbers.

This strategy can double your estate-tax exemption

'Portability' allows a surviving spouse to tack the decedent's exemption on to his or her own. Despite the higher threshold for paying estate taxes in the 2017 tax law, experts recommend filing for the benefit.

Couple in Morgan Stanley advisory account wins $519,000 arb case over unsuitable investments

Plaintiff's lawyer says junk bonds, futures contracts and derivatives were inappropriate for his clients.

The growth of factor-based investing

Advisers are making decisions about clients' portfolios by using the same characteristics that govern factor-based ETFs.

Finra makes its list to target hundreds of rogue individuals

The regulator sees patterns in the behavior and disclosures of high-risk brokers.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print