A former insurance agent who posed as a securities broker - without the appropriate licenses - has become the target of the Maryland Securities Commissioner after he took $100,000 from elderly customers and never returned it to them.
The insurance agent at the heart of the matter, Johnathan Munoz with the firm JM Financial Services, was never registered to sell securities but in late 2020 promised two customers in their seventies he would turn $100,000 earmarked for a separate brokerage account into $325,000 in little over a year, according to a July cease and desist order from the Maryland Securities Commissioner.
According to the Maryland order, Munoz allegedly defrauded the customers when he falsely represented to them that he was a stockbroker or financial advisor and offered to manage their investment assets through JM Financial. He also falsely told them he would open a separate securities account for them and manage their money when, in fact, he used their investment funds for his personal benefit, according to the Maryland Securities Commissioner.
Munoz was barred from ever working in the securities industry in Maryland and ordered to pay $115,000 as a civil penalty.
A call to Munoz's phone listed in his online insurance agent history could not be completed because it was not in service. His firm was based in Gaithersburg, Md. according to online insurance agent profiles. He has not been a licensed insurance agent since last November.
InvestmentNews in the past has focused on the confusing nature of the various regulatory regimes under which financial advisors work. Among the most vexing issues facing the financial advice industry is that of advisers who are restricted or barred from selling securities, but continue to hold a license to sell insurance.
"Many of the dangers for investors, sadly, come from industries similar to the retail securities business, and that includes insurance salespeople," said Sander Ressler, managing director of Essential Edge Compliance Outsourcing Services. "Customers should use regulated industries to their advantage and hire career specialists in each area of their lives. Counting on one person to take care of their needs across multiple industries can lead to financial disaster."
"Customers should also work with professionals who are members of organizations with stated high standards, such as CPAs and CFPs," he added.
Munoz was licensed as an insurance producer with the Maryland Insurance Administration from January 2019 to November 2023, when his license expired, according to the Maryland order.
From February 2023 to July, Munoz was affiliated with Park Avenue Securities in a non-registered capacity, and from November 2019 to November 2020, he was affiliated with Mutual of Omaha Investor Services, Inc., also in a non-registered capacity.
According to the Maryland order, Munoz was discharged by Mutual of Omaha’s parent company “for
improper business practices involving submission of an unauthorized insurance application.”
Prior to that, Munoz was affiliated with NY Life Securities in a non-registered capacity from
October 2018 to November 2019.
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