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Regulatory Sanctions

Broker Opens Pandora’s Box After Altering a Customer’s Annuity Account Profile

November 3, 2017

by Howard Haykin


This post was supposed to be a simple tale about a broker who made unauthorized changes to a customer’s variable annuity distributions. However, this case took on foreboding aspects – in large part because FINRA does not provide answers to critical questions. Read on …  


Robert Hurley agreed to a $5K fine and a 2-month suspension to settle FINRA charges that he altered a customer’s signed variable annuity distribution form without the customer’s consent.


BACKGBOUND.   Hurley, a resident of Agawam, MA, has 33 years with 3 firms. He holds a Series 6 (Investment Company Products/Variable Contracts Representative Exam) license. For whatever reason, Hurley left Pruco Securities in January 2016 after 32 years. He spent 5 months with LPL Financial before joining Key Investment Services. However, Key Investments U5’d him 2 months later in November 2016 because “RR admitted to altering and initialing for the client without the client's consent on a distribution form after the client had signed it.” Hurley had no prior disciplinary history.


FINRA FINDINGS.    On 10/20/16, while registered with Key Investment Services, Hurley altered a customer’s signed variable annuity (“V/A”) distribution form without the customer’s consent.

  • One alteration changed the payment frequency from monthly to annual.
  • Another alteration modified how payments would be calculated.
  • Hurley also placed the customer’s initials next to both alterations.


The alterations caused the customer to receive the following month a much larger V/A distribution payment than anticipated.


FINANCIALISH TAKE AWAYS.    FINRA levied a $5K fine and a 2-month suspension – a relatively heavy sanction, but apparently a reasonable one. However, the sanctions are such that the broker can re-enter the industry with another FINRA member firm. And that’s what concerns me. And my concerns arise not for what FINRA details in its case analysis, but for what FINRA leaves out.


Let’s begin with some unanswered questions.


  • Why did Hurley leave Pruco, his only Wall Street employer, after 32 years?
  • Why did Hurley last only 5 months with LPL Financial, which he joined just 3 months after leaving Pruco?
  • What prompted Hurley to commit a violative act after 32 years without a single disciplinary disclosure? 
  • What prompted Hurley to make unauthorized changes to his customer’s V/A account that apparently had no impact to his compensation?
  • Did Hurley seem troubled or unstable during interviews with FINRA investigators?
  • Did FINRA investigators interview Pruco personnel about the circumstances of Hurley’s departure?


Context is everything, here. And with answers to these 6 questions, FINRA may have had justification for barring Hurley from the industry - i.e., that he posed significant danger to customers of a financial securities firm. Such a determination would have required “out-of-the-box” thinking, and perhaps FINRA personnel are either incapable of, or prohibited from, doing just that. Which would be shame because the potential for future danger is quite relevant in this case - as it is in many other cases.


And so the jury remains out on Mr. Hurley.


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

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2016052582701.