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Regulatory Sanctions

WWW: Broker Goes 'Double or Nothing' on Life Settlement Sales

April 21, 2017

[Photo:  DullHunk  (Duncan Hull) / Flickr]


Wink, Wink, Nod, Nod. A broker thinks he's got the system beat. If the firm won't let him sell life settlement contracts, he'll just do the sales through his wife, who would serve as a front. The scheme, which lasted 3 months, landed the broker a 6-month suspension. Double or nothing!


James Calder II, of Borger, TX, agreed to a $15K fine and 6-month suspension to settle FINRA charges that he engaged in an undisclosed outside business activity by participating in the sale of life settlement contracts to customers of his member firm after it had expressly denied his request to participate in such activity.


BACKGROUND.    Calder entered the securities industry in September 1999. He worked for Raymond James Financial Services from 2002 until February 2016, when he was permitted to resign during Raymond James' internal investigation of his involvement in "selling life settlement to clients." Calder has not since associated with another FINRA member firm. During his career, Calder obtained Series 7,9,10 and 63 securities licenses.


FACTS AND CIRCUMSTANCES.   According to FINRA, from April 2010 to June 2010, recommended life settlement investments to the customers, and when they expressed interest in investing, he referred them to his wife to make their investments. Calder’s wife, a school teacher who had no prior experience in the securities or insurance, became licensed in 2009 by Life Partners to sell its life settlement products.


The referral to his wife might have been fine, except that Calder facilitated the customers’ investments and "sealed the deal” by answering their questions about life settlement investments and providing them with the necessary paperwork to make the investments. He also dealt exclusively with the customers, while his wife effectively sat on the sidelines throughout. On payday, nearly $9,000 in commissions on those sales were received into a joint bank account.


FINANICIALISH COMMENTS.    One other possible way for Calder to 'get away' with such unauthorized sales was to deal with non-Raymond James customers. This, of course, would still have been in violation of his employment, but if he's going to try and make a go at it, he might have diversified his client base.


This case was reported in FINRA Disciplinary Actions for April 2017.

For details on this case, go to … FINRA Disciplinary Actions Online, and refer to Case #2016048601901.