[ by Howard Haykin ] Unfortunately, FINRA caught up with this registered rep in Deerfield Beach, FL, after he already had allegedly fleeced his customer on multiple annuity switches that cost significantly reduced her investments, but swelled his commission revenues. Background Information on Respondent. Andrew Aragona entered the securities industry on in September 1985.  From 7/10/07 until 3/19/09, Aragona was associated with Newbridge Securities Corporation.  He has not been associated with a FINRA member firm since his association with Newbridge.  While associated with Newbridge, Aragona held Series 7, 63, and 65 licenses. FINRA Findings and Allegations. Prior to associating with Newbridge in mid-2007, Aragona had sold the customer 4 variable annuities – which provided him with a basic understanding on how to "game the system."  Between September 2007 and September 2008, while associated with Newbridge, Aragona recommended 2 variable annuity switches to a single customer - who, at the time, was in her late seventies, had a moderate risk tolerance, earned over $100K in annual income, had $500K in liquid assets, and viewed capital appreciation as her primary investment objective. Shortly after his license was effective with Newbridge, in 9/6/07, Aragona made his first recommendation - that the customer should consolidate all of her annuities into one annuity.  H recommended that she switch into the Lincoln National ("Lincoln") annuity, because that annuity purportedly offered "revocable annuitization" and because the Lincoln annuity permitted the customer to leave money to her heirs in a tax efficient manner.

The Lincoln annuity was purchased for $1,185,229 at a cost to the customer of about $69,000 in surrender fees.  For his efforts, Aragona received $67,500 in commissions in connection with the transaction.

In August 2008, Aragona proceeded with Switch #2 - less than a year after he had the customer purchase the Lincoln annuity.  This time, Aragona recommended that the customer switch out of the Lincoln annuity and into the Nationwide Marketflex II ("Nationwide") annuity. His justification, this time, was that the Nationwide annuity provided more flexibility than the Lincoln annuity in volatile market conditions and because the Nationwide annuity allowed investments in Rydex subaccounts.. Yet, besides the new surrender fees that the customer would incur for the switch transaction, there was the downside that the Nationwide annuity did not offer revocable annuitization - which Aragona has said was the very purpose his having recommended Lincoln one year earlier.

In any case the Nationwide annuity cost $1,017,195, the customer incurred $61,000 in surrender fees, and Aragona walked away with $56,000 in commissions. Yet, it's interesting to note that the newest annuity - Nationwide - did not offer revocable annuitization, - which was the very purpose for Aragona advising the customer to make the initial switch.

Needless to say, a quick mathematical analysis of the transaction indicated that the benefits of investing in Rydex annuities, along with revocable annuitization features and the ability to invest in Rydex funds, were outweighed by the significant costs incurred by the customer.  All that, and it cost a total of $130,000 in surrender charges over the course of less than one year. The comparison of costs vs. benefits of the 2 switches was not even close - as costs significantly outweighed any purported benefits.  Accordingly, FINRA determined that the transactions were entirely unsuitable for this customer. Based on the foregoing conduct, FINRA determined that Aragona violated NASD Conduct Rules 2310 and 2110. FINRA Sanctions. Aragona was ordered to pay a fine of $138,500 and to serve a one-year suspension from association with any FINRA member in any capacity. For further details, go to:  [FINRA AWC #2010023963301] and [FINRA Disc. Actions for July 2012].