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NEWSLETTERS & ALERTS
Former LPL Brokers Fraudulently Targeted Federal Retirees - SEC
by Howard Haykin
The SEC today charged 4 former Atlanta-area brokers with fraudulently inducing federal employees to roll over holdings from their federal Thrift Savings Plan retirement accounts into higher-fee, variable annuity products.
FEDERAL EMPLOYEE BENEFIT COUNSELORS ("FEBC") – d/b/a KEYSTONE CAPITAL PARTNERS, is a GA-registered corporation cofounded by Christopher Laws and Jonathan Cooke in early 2012. From its inception until December 2014, FEBC's office was located in the same office in Alpharetta, GA, as the Office of Supervisory Jurisdiction ("OSJ") for LPL Financial - the broker dealer with whom the 4 defendants were registered. Christopher Laws was the manager of this office.
CHRISTOPHER LAWS, 49, a resident of Alpharetta, GA. Laws has 15 years’ experience with 5 firms. From 2005 to 2014, he was associated with LPL Financial as a registered rep, and from about 2006 to 2014 he was the manager of LPL’s Alpharetta OSJ. He was last registered in April 2017, when he was permitted to resign from BCG Securities. Laws co-owns FEBC with Jonathan Cooke, and during the Relevant Period, was the entity's CFO and Secretary.
JONATHAN COOKE, 34, a resident of Atlanta, GA. Cooke has 8 years’ experience with 3 firms. From 2009 to 2014, he was associated with LPL Financial as a registered rep in the Alpharetta OSJ. He was last registered December 2016, when he voluntarily resigned from BCG Securities. Cooke co-owns FEBC with Laws and, during the Relevant Period, was the entity's CEO.
BRANDON LONG, 28, is a resident of Atlanta, GA. Long has 4 years’ experience with 3 firms. From April 2014 to December 2014, he was associated with LPL Financial as a registered rep in the Alpharetta OSJ. He was last registered April 2016, when he was permitted to resign from BCG Securities. He is also listed as being employed by Keystone Capital Partners.
DANNY HOOD, 44, is a resident of Marietta, GA. He has 15 years’ experience with 9 firms. From 2012 to 2014, he was associated with LPL Financial as a registered rep in the Alpharetta OSJ. Since August 2015, Hood has been an investment adviser representative with Agency Counselors, an SEC RIA.
SEC FINDINGS. The SEC charges Federal Employee Benefits Counselors (FEBC), through which the brokers targeted federal employees nearing retirement with sizable funds invested in the Thrift Savings Plan (“TSP”). The brokers, who worked in the Alpharetta, GA, OSJ of LPL Financial, misled investors as to significant details about the recommended variable annuity investment (“V/A”), including the associated fees and guaranteed investment returns. They also misled investors into believing that the V/A’s were in some way affiliated with or approved by the federal government.
In some instances, investors were led to believe that their funds would be invested in a product that was offered, vetted, or specifically selected by the TSP. Those investors were sent incomplete or modified transaction forms, along with written materials that the brokers devised to obscure the fact that the investment was a privately issued V/A with no connection to the TSP and would be processed through a private brokerage firm – LPL Financial - with which they were associated.
All told, approximately 200 V/A contracts with a total face value of some $40 million were sold to federal employees, who used monies rolled over from their TSP accounts to fund their purchases. The brokers collectively earned $1.7 million in commissions on these sales.
The SEC seeks disgorgement of ill-gotten gains plus interest and penalties and permanent injunctions.
[Click here for further details: SEC COMPLAINT]