In a case reported only recently by FINRA, Richard Lee Ell was suspended through the end of December 2012 and fined $5,000 after allegedly settling a customer complaint without informing his firm, Transamerica Advisors, Inc.
The complaint arose after a customer incurred a surrender charge during a variable annuity ("VA") exchange.
According to FINRA'S findings, Ell purchased a VA policy for a customer in 2010 following the liquidation of a separate VA policy, which produced a surrender charge of $1,050.
The complaint states that after the customer informed Ell he was unaware a surrender charge would apply to the VA exchange, Ell attempted to settle the complaint by paying the customer $525, or exactly half of the surrender charge.
FINRA rules state that such complaints are to be reported to the employing or associated firm; because Ell failed to inform Transamerica, he was found to have violated industry regulations.
VA and similar investment options sometimes carry a variety of charges and hefty fees such as surrender charges and penalties.
Unfortunately, this is hardly the first instance of fees or penalties incurred during a transaction costing a customer hundreds or thousands of dollars.
For instance, broker Brett David Henderson—who is suspended until March 15, 2013—was fined $95,000 last April after pocketing $84,296 in commissions while improperly engaging in VA switches that cost his customers $82,505 in surrender penalties and fees.
If you have suffered surrender charges or other penalties or fees you believe have been unfairly assessed and such liabilities have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.