The Financial Industry Regulatory Authority Inc. has accused a former MetLife Inc. and Prudential Financial Inc. broker of harmful and deceptive sales practices relating to variable annuities.
Winston Wade Turner, formerly a registered representative of MetLife Securities Inc. and Pruco Securities Inc., allegedly “engaged in a course of deception and other misconduct in connection with sales and exchanges of variable annuities involving numerous customers,” according to
a complaint filed Feb. 25 by Finra's Department of Enforcement.
Among other allegations, Mr. Turner allegedly induced some clients to exchange their variable annuities and other investments, whereby they surrendered existing contracts to fund purchases of new variable annuities, sometimes incurring surrender charges for the investor and generating additional commissions for Mr. Turner, according to the complaint.
Mr. Turner hid the unsuitable nature of these transactions from his clients and broker-dealers, partly by falsifying documents and misrepresenting the way some income features on the annuity contracts worked, the complaint says.
Some critics have argued that high commissions paid on variable annuity contracts
provide an incentive to sell these products, while others argue that
high compensation is justified because they are complex financial products and require additional paperwork, all of which contribute to more work and a longer sales process.
In total, 12 different clients were referenced in the complaint. Although monetary damages due to Mr. Turner's alleged misconduct weren't listed for each individual, the complaint details approximately $151,000 in lost money among five of the clients due largely to charges incurred for surrendering the VA contracts.
Finra is requesting, among other things, that Mr. Turner “disgorge fully any and all ill-gotten gains, together with interest,” according to the complaint.
Mr. Turner couldn't immediately be reached for comment on the allegations.
Jonathan Golomb, senior special counsel in Finra's Department of Enforcement and the signatory of the complaint, declined comment beyond the complaint's text because of the active status of the case.
Mr. Turner was a registered representative of MetLife Securities from 2011 to 2013, and with Pruco from 2013 to 2015. He was terminated from Pruco in August 2015 for making an unsuitable recommendation and providing inaccurate information regarding the transaction, according to the Finra complaint.
A Finra BrokerCheck report of Mr. Turner indicates he has two outstanding customer disputes from his time at Pruco, which allege damages of $75,200 and $49,040, respectively.
DETAILED ALLEGATIONS
Mr. Turner allegedly hid the nature of the variable annuity transactions detailed in the Finra complaint from his broker-dealer by circumventing the “additional supervisory scrutiny and documentation” required for these exchanges, the complaint says.
In some cases, Mr. Turner disguised his actions by recommending clients deposit proceeds from the surrender of the VA contracts into their bank accounts, and then using that bank money to buy new variable annuities, rather than doing it as a direct transfer from annuity to annuity, according to the complaint.
He also allegedly falsified VA applications, customer information forms, and related documents for VA exchanges; forged customer signatures; and misrepresented his own e-mail address as that of customers to ensure he received account notifications rather than his clients.
In addition, Mr. Turner allegedly falsely represented the function of income riders on some of the VA contracts, telling clients that their contracts would generate a guaranteed minimum amount of interest annually. In fact, the contracts only guaranteed minimum withdrawal or annuitization rates, not annual interest accruals, through features such as a guaranteed minimum income benefit (GMIB), the complaint says.
Mr. Turner is no longer a registered representative, but
has an active license to sell insurance products in the state of Florida. That means he's currently barred from selling securities products such as variable annuities, but can still sell certain insurance products such as fixed and fixed-indexed annuities.
