Elderly investors win $3.2 million Finra arbitration award against AXA Advisors

An elderly couple in upstate New York won a $3.2 million Finra arbitration award against AXA Advisors in a case involving unsuitable variable annuity and life insurance sales.

James and Sandra Fitzpatrick alleged that their then-AXA representative, Francesco Puccio, made five transactions beginning in 2011 and continuing until 2014 that produced large commissions for Mr. Puccio but were damaging to the Fitzpatricks’ assets and estate plan, according to an affidavit filed in New York Supreme Court.

They alleged that Mr. Puccio sold them the products to generate more income for himself so that he could pay his bills during a time of personal financial trouble.

A three-person, all-public Financial Industry Regulatory Authority Inc. arbitration panel awarded the Fitzpatricks $2.2 million in compensatory damages, $889,868 in attorneys’ fees and $67,293 in costs. The arbitrators declined to award punitive damages.

The Fitzpatricks originally asked for $3 million in compensatory damages.

“We’re thrilled with the outcome,” said Joseph Peiffer, partner at Peiffer Wolf Carr & Kane, who represented the Fitzpatricks. “It finally holds AXA accountable.”

AXA put distance between itself and Mr. Puccio.

“The financial professional who was involved in this matter has not been affiliated with the company for more than five years,” an AXA spokesman said in a statement. “We do not condone any actions by this individual which were inconsistent with our policies and values. We remain committed to serving our clients.”

Cambridge Investment Research Inc. also was named as a respondent in the Finra arbitration. The Fitzpatricks settled with Cambridge in January 2018, according to the arbitration award. Mr. Puccio’s BrokerCheck profile indicates the agreement was for $115,000.

The Fitzpatricks, who own the Fitzpatrick Poultry Farm in Whitesville, N.Y., worked with Mr. Puccio when he was a representative in AXA’s Rochester, N.Y., office. James Fitzpatrick is 90, and Sandra Fitzpatrick is 77.

The sale of unsuitable variable annuities and life insurance products is rampant in upstate New York, Mr. Peiffer asserted. He said he is pursuing more cases against AXA.

“This is a huge shot across the bow,” he said. “If you sell this crap that people don’t need and is too expensive, you have to pay them back for it. I don’t know how many whacks upside the head it will take for AXA to get its act straight, but we’ll keep swinging until they do.”

AXA has had trouble in the state previously. In 2014, the New York Department of Financial Services fined the firm $20 million for annuity sales violations.

In a separate, pending Finra arbitration case, Mr. Puccio is accused of stealing money from another AXA client, Shirley Kerwin, 81.

Mr. Puccio never should have been hired by AXA in 2011 because of financial difficulties he was going through, Mr. Peiffer said.

“Puccio sold [the Fitzpatricks] high-commission products because he could not pay his bills,” the affidavit states.

According to the document, AXA learned of Mr. Puccio’s ongoing tax liens in 2013 but did not put him on heightened supervision for another six months. Four months into the stepped-up supervision, the fifth unsuitable transaction occurred.

Mr. Puccio left AXA for Cambridge in 2014 and stayed there for one year, according to his BrokerCheck profile. He has been barred from the industry by Finra.

The Fitzpatricks followed him to Cambridge, where more abuses occurred, according to the affidavit. AXA did flag some of Mr. Puccio’s transactions involving the couple but didn’t inform them of its findings or tell them about his credit troubles.

Related Topics: Axa Advisors LLC, Financial Industry Regulatory Authority