Voya Financial Advisors settles with more than a dozen clients of former broker

Voya Financial Advisors settles with more than a dozen clients of former broker
So far, the firm has paid more than $900,000 on complaints about the REITs and variable annuities the broker used in clients' portfolios.
SEP 27, 2019
Voya Financial Advisors Inc. is cleaning up the mess a former broker created by investing clients heavily in nontraded real estate investment trusts and variable annuities. The ex-broker, James T. Flynn, was registered with Voya Financial Advisors from 2013 to 2017, according to his BrokerCheck report.​ That profile lists 40 so-called "disclosure events" on his record, an unusually high number that includes a bankruptcy, tax liens and closed customer complaints as well as 13 open arbitration claims still pending against Voya Financial Advisors that involve Mr. Flynn. A handful of those claims also list two other firms, Capital Investment Group and IFS Securities Inc., as targets of clients of customer complaints involving Mr. Flynn. [Recommended video: Michael Kitces: Efficiencies become crucial for advice firms when they grow] So far, Voya Financial Advisors has paid settlements of $907,000 over a dozen customer complaints, many stemming from real estate securities and annuities, according to Mr. Flynn's BrokerCheck report. "The firm settled without my input," Mr. Flynn responded in the disclosure of one client settlement. "I contributed nothing to the settlement." Capital Investment Group, where Mr. Flynn was registered before Voya Financial Advisors, has paid one settlement of $52,500, according to BrokerCheck. Variable annuities and nontraded REITs have typically been among the highest commission products sold by brokers to clients. Scott Silver, a plaintiff's attorney, said he had about a dozen customer claims totaling up to $2 million in damages still pending against Voya Financial Advisors stemming from the sale of variable annuities and nontraded REITs. "Every client of Flynn's got the same mixed bag of about 30% in variable annuities and then the rest a substantial percentage in REITs," Mr. Silver said. "A client came to see Flynn and was told REITs were the way to go." "The claims are against Voya because that's where positions [in variable annuities and REITs] were put on, and most of our clients were told the need to hold the position," he said. "Voya was allowing him to sell these products in such concentrated positions. It's surprising they were even on the firm's platform." Voya Financial Advisors fired Mr. Flynn in February 2017 after he "provided misleading information to the firm" during an investigation stemming from a customer complaint. Variable annuities were listed as the product involved in that matter. He then worked for a year at IFS Securities Inc., which fired him after a client alleged a trading problem involving variable annuities, according to the BrokerCheck profile. A call to his firm, Flynn Wealth Management, in Greenville, S.C., could not be completed. A spokeswoman for Voya Financial Advisors, Laura Maulucci, wrote in an email: "This individual is no longer an advisor with Voya Financial Advisors." Ms. Maulucci did not respond when asked whether it was problematic for brokers to build portfolios with large positions of nontraded REITs and variable annuities for clients. Juliann Kaiser, a spokeswoman for IFS Securities, did not return a call Friday afternoon to comment. Richard Bryant, CEO of Capital Investment Group, declined to comment.

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