Finra on Monday fined Hornor Townsend & Kent, a large insurance company-backed independent broker-dealer, $180,000 for falling short over a three-year period in supervising an unnamed registered representative who sold securities associated with a disclosed, but unapproved, outside business activity that turned out to be a Ponzi scheme.
The oversight by the firm occurred from July 2013 to March 2016, according to the Financial Industry Regulatory Authority Inc. The rep was selling securities known as Future Income Payments, and according to the Department of Justice, that was a nationwide Ponzi scheme that exploited military veterans in desperate financial straits and targeted elderly investors seeking a safe retirement investment.
The rep stopped working at Hornor Townsend & Kent in 2016, according to Finra, and hasn't been registered with another firm since. It's not clear how much of the Future Income Payments scheme the rep sold.
Scott Kohn of Newport, California, last year received a 10-year sentence for running Future Income Payments or FIP, formerly known as Pensions Annuities and Settlements. From April 2011 until April 2018, Kohn and his co-conspirators used FIP as a vehicle for a nationwide Ponzi scheme, according to the Department of Justice.
Hornor Townsend & Kent "failed to timely review" the financial advisor's request in July 2013 to
engage in an outside business activity involving the sale of a Future Income Payments security, according to Finra.
Communication inside the firm broke down, according to Finra.
"When the firm decided approximately seven months later to deny the request, it failed to communicate its decision to" the advisor, according to Finra. "In his notice to the firm, [the advisor] stated he intended to begin engaging in the sales of this product by July 20, 2013."
"Despite being on notice of this intention, the firm failed to reasonably investigate whether [the advisor] had commenced selling the security," violating industry rules, according to Finra.
Hornor Townsend & Kent agreed to the settlement with Finra without admitting or denying the findings. Calls Wednesday to the firm's president, Aaron Gordon, were not returned.
With 750 registered reps and 200 offices, Hornor Townsend & Kent is owned by Penn Mutual Life Insurance Co.
Mayer Brown, GWG's law firm, agreed to pay $30 million to resolve conflict of interest claims.
Orion adds new model portfolios and SMAs under expanded JPMorgan tie-up, while eMoney boosts its planning software capabilities.
National survey of workers exposes widespread retirement planning challenges for Gen Z, Millennials, Gen X, and Boomers.
While the choice for advisors to "die at their desks" might been wise once upon a time, higher acquisition multiples and innovations in deal structures have created more immediate M&A opportunities.
A father-son pair has joined the firm's independent arm in Utah, while a quartet of planning advisors strengthen its employee channel in Louisiana.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave
