Registered Principal in Grand Island, NY, agreed to a $10K fine and a 5-month suspension as principal
to settle FINRA charges he failed to reasonably supervise an RR by approving variable annuity ("VA") transactions the RR recommended and affected - i.e., he failed to adequately respond to red flags alerting him to unsuitable transactions.

This particular RR had been placed on heightened supervision, which was formalized by a written agreement that both the RR and Principal signed.  Under the agreement, Principal Gibas was required, among of things, to preapprove all the RR's annuity business and new accounts, to speak with each of the RR's customers who were 65 or older, and to help the RR diversify her business. 

The particular VA transactions in question were unsuitable in that their costs outweighed the benefits and, in some cases, customers purchased a rider for which they were not eligible.  In approving these transactions, Principal missed numerous red flags - e.g., transactions appeared on exception report, which required a more comprehensive follow-up. 

Princiap also didn't adequately carry out his other responsibilities under the firm’s heightened supervision agreement.  Although he reviewed the RR's transactions and contacted certain elderly customers before transactions were affected, some of the conversations with the RR's customers were cursory in nature and were conducted with the RR being present, or before Principal had received any transaction paperwork. 

In short, nothing the Principal did - including speaking with other supervisory and compliance personnel - proved effective in preventing unsuitable sales. 

This is FINRA Case #2005002244703.   [Disc. Actions for February]