FINRA charged former Legend Equities broker Walter Joseph Marino with recommending unsuitable variable annuity replacements that benefitted him to the tune of $60,000 in commissions while his customers—including a 78-year-old retired widow—suffered financial harm, including incurring surrender charges and tax liabilities, due to the unsuitable recommendations.
OHO Disciplinary Proceeding #2015046537501
According to the complaint, Marino (CRD #2121623) recommended that two customers replace their non-qualified variable annuities (VAs), which FINRA says was unsuitable on multiple levels. The VAs at issue include the Jackson National Life Insurance VA known as JNL Perspective II and a newer VA sold by The Variable Annuity Life Insurance Company called "Equity Director."
Marino allegedly knew that the replacement would result in a 7% surrender charge under the JNL VA, but failed to disclose this expense and failed to replace the VAs using a procedure outlined by Section 1035 of the Internal Revenue Code, which would have made the exchanges tax-free. In addition to the surrender charges and commissions, the report states that by failing to utilize the 1035 exchanges, Moreno caused his clients "to incur significant tax liabilities."
This is Marino's 16th disclosure, which includes a handful of settled disputes alleging misrepresentations and excessive fees/commissions, and a discharge from two former employers, Legend Equities and Lincoln Investment. The Lincoln Investment—which Marino joined after his termination from Legend Equities—disclosure specifically stated that Marino was under "heightened supervision" at Lincoln due to his annuity-related violations at his previous firm, Legend Equities.
Despite being discharged from two firms for unsuitable annuity replacement violations, Benjamin Securities, Inc. hired Marino less than two weeks after Lincoln Investment let him go.
Marino's recommended replacement VAs also purportedly resulted in increases in annual mortality and expense charges, a new annual advisory fee of 1.5% of the new annuity's value, and new surrender periods for the customers. FINRA found the recommendation unsuitable because "the VALIC Annuity did not provide any benefit...that outweighed the increased fees and expenses and the new surrender periods."
FINRA alleged that Marino pocketed $60,000 in commissions while causing substantial financial harm to his customers, and purportedly violated several FINRA rules by misrepresenting to his firm the source of funds being used to purchase the new VAs. The complaint states that Marino falsely stated that the new VA purchases did not involve replacements, when, in fact, they were precisely replacements.
FINRA also concluded that Marino made or enclosed false statements in his customers' annuity applications, questionnaires, replacement forms, and disclosure forms. Investigators found that Marino wrote a misleading e-mail to Legend Equities' compliance department, and falsified, or caused falsification of, the firm's books and records.
It is important to note that FINRA'S allegations remain to be proven.
If you have invested with former Legend Equities/Lincoln Investment broker Walter Joseph Marino or with any representative or financial adviser whose unsuitable variable annuity replacement or other recommendations has resulted in financial damages, such as the incurrence of excessive fees, charges, or commissions, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.