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Regulatory Sanctions

Customer Complaint Upends Variable Annuity Sale by Unregistered Person

December 18, 2018

by Howard Haykin


A non-registered fingerprint person was sponsored by his firm to take FINRA registration exams in September 2015, April 2016 and September 2017. He never passed. While I can appreciate this individual’s determination, I have to wonder if he's the right fit for a registration- or exam-based profession.
Well, by hook or by crook, this individual went out and showed that he can be a registered rep – with or without the license. That is, until a customer complaint upended his efforts.


The individual first became associated with a FINRA member firm in 2011. From August 2015 through March 2016 (the "Relevant Period"), while associated with MML Investors Services (“MML”), this individual solicited the sales of variable annuities to at least 3 customers of the Firm - in apparent violation of NASD Rule 1031 (Membership and Registration).


In April 2017, a customer complained to MML about a variable annuity that she had purchased through the Firm, noting that, had she known this individual was unlicensed, she would not have purchased the product. An internal investigation confirmed that the individual had solicited the customer's investment and that a registered rep of the Firm signed his name on the variable annuity application - even though he had not substantially participated in the sale of the annuity.


A FINRA investigation revealed that the unregistered individual jad participated in the sale of variable annuities to not just one, but to at least 3 customers. On some occasions, the unregistered individual met with customers and made presentations containing detailed information about the variable annuities. 


All told, the unregistered individual earned $5,500 on the sales - his cut of the registered broker's $13,700 in commissions. [I was unable to determine what ever became of the registered broker.] 



This case was reported in FINRA Disciplinary Actions for December 2018.

For details the case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2018057055301.