Finra fines and suspends adviser for software misconduct involving 78-year-old client in variable annuity case

Finra fines and suspends adviser for software misconduct involving 78-year-old client in variable annuity case
Ameriprise Financial Services rep altered and backdated client notes, the regulator said.
MAY 23, 2016
The Financial Industry Regulatory Authority Inc. levied a $50,000 fine against an Ameriprise general securities representative who altered his software notes to document his recommendations, for a 78-year-old client, to invest $2 million in Ameriprise variable annuities, the regulator's decision shows. David B. Tysk, who has been working for Ameriprise in Minnesota since 1988 according to his LinkedIn page, was fined $50,000 and suspended for one year for adding and backdating 54 new entries and changing 13 previous entries in his client-relationship management system, to support recommendations that were claimed to be unfit for his client, according to the document filed on May 16. Mr. Tysk made these changes after the client had complained to the firm, thus initiating an internal investigation. He will be appealing to the Securities and Exchange Commission, said his attorney, Brian L. Rubin, a partner at Sutherland Asbill & Brennan. Mr. Tysk used ACT! Notes, a CRM not required by the firm but used by half of Ameriprise's Bloomington, Minn., office employees, the document states. Contemporaneous notes, those made at the time or soon after an event, are "golden" pieces of evidence, and it isn't common to see them altered this way, said David E. Robbins, a partner at law firm Kaufmann Gildin & Robbins in New York. "You should not be able to replace any of the 10 commandments," Mr. Robbins said. "You shouldn't be able to go back and say, 'I didn't mean that commandment, I meant this one.'" CRM providers handle this function differently. Junxure allows advisers to alter and backdate notes, but keeps an audit trail only accessible by higher-ups. Wealthbox does the same. Redtail does not allow advisers to modify notes, but has a delete button that is visible in a separate report. The company added a comment feature last year to be tacked on to notes, which has its own time stamp. Those who use ACT!, the program used in this case, can still update, add to or change notes from the past, a spokeswoman said. Based on the notes Mr. Tysk first handed over in a discovery period, which showed they were last edited by him after the client's complaint, his client's counsel requested to see the edits made. His BrokerCheck profile is marked as pending regulation as of October 2015, for demonstrating "untrustworthiness and/or incompetence to act as an insurance producer," but shows the decision in a response to his appeal, marked in March 2013. Mr. Tysk had first made the $2 million recommendations in December 2006. The client invested $1 million first, and purchased another $1 million seven months later. The firm sent an exception report to Mr. Tysk, based on his client's purchase and age, but he overrode it, stating the client's high net worth, available cash on hand, the annuity's deferred tax and that the client did not need the money during his lifetime — it was to be passed on. Months later, the client raised suitability concerns, adding he did not need to insure any assets to his heirs. Though advisers could enter false information at the time of making the note, they're often not thinking that far in advance, Mr. Robbins said. "The idea of being able to go back and change history to correct a failing should be detectable," he said. "Everything is detectable these days."

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.