Axa Advisors to pay $50,000 settlement in connection to retirement-fund fraud

The Securities and Exchange Commission on Tuesday filed an administrative proceeding against Axa Advisors LLC < http://sec.gov/litigation/admin/2009/34-60480.pdf> for failing to supervise a former registered representative who pleaded guilty to securities fraud in January 2008.

New York-based Axa Advisors offered to pay a $50,000 settlement — without admitting to or denying the SEC’s allegations. The SEC will accept the settlement offer, according to the administrative proceeding.

Axa Advisors did not return calls for comment.

The company allegedly failed to supervise Gordon Moore, who worked in its Longmont, Colo., office from 2001 to 2007. During that time, he fraudulently induced investors, most of whom were teachers in Colorado’s public schools, to illegally move their retirement funds out of state-managed accounts and into accounts offered by Axa Advisors.

The company “had inadequate supervisory procedures in place to review rollover transactions into customers’ existing accounts, because supervisors were only required to review rollovers into new annuity accounts, not existing annuity accounts,” the SEC said in the administrative proceeding. “Moore completed over 130 fraudulent rollovers by exploiting this gap.”

In February 2008, Mr. Moore was sentenced in District Court for the City and County of Denver to two years’ probation and ordered to pay criminal restitution based on commissions he earned from his fraudulent activities, the SEC said in the administrative proceeding.

In August 2008, the SEC barred Mr. Moore from working as a broker-dealer or investment adviser.

Axa Advisors has since adopted procedures to ensure that all 401(k) rollovers are appropriate and is in the process of implementing additional improvements recommended by an outside consultant, the SEC’s administrative proceeding said.

Related Topics: Axa Advisors LLC, Axa Insurance Group, Securities and Exchange Commission