Andrew M. Abern, a Stockbroker with Dalton Strategic Investment Services Inc., was permanently barred from association with any member of Financial Industry Regulatory Authority (FINRA) in any capacity after consenting to findings that he failed to cooperate with a FINRA investigation into Abern’s recommendations to customers regarding variable annuities. Letter of Acceptance, Waiver, and Consent, No. 2015043654301 (Oct. 14, 2015).
According to the AWC, FINRA had requested that Abern, pursuant to Rule 8210, appear for an on-the-record interview for purposes of answering questions pertaining to his recommendations made to customers concerning the purchase and sale of variable annuities. The AWC stated that Abern declined to assist FINRA in this regard, citing medical reasons. Consequently, FINRA found Abern to be in violation of Rules 8210 and 2010.
FINRA Stockbrokers like Abern who do not cooperate with FINRA’s investigations often face a permanent bar from practicing in the securities industry as such lack of cooperation violates FINRA’s Rule 8210 – requiring that no member or person shall fail to provide information or testimony or permit an inspection and copying of books, records, or accounts pursuant to the rule. FINRA typically accompanies a Rule 8210 violation with a Rule 2010 violation when individuals, according to FINRA, do not appear to observe high standards for commercial honor and just and equitable principles of trade.
This is not the first time that Abern was subject to misconduct by FINRA. On August 20, 2012, Abern was fined $25,000.00 after consenting to FINRA findings that he violated NASD Conduct Rules 2310 and 2111 as a result of providing customers with variable annuity expense disclosure forms understating the annual expenses, as well as engaging in an unsuitable transaction with a customer.
FINRA Conduct Rule 2111 provides that a member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile.
A customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation.
Prior to the recommendation of any security, the broker must first understand the risk and characteristics of the securities being recommended, and whether that security is suitable for any customer. The second step, in connection with the recommendation of a particular investment or investment strategy, is to determine whether the transaction is suitable for that particular customer.
Public disclosure records reveal that Abern has been subject to twelve disclosure incidents. On April 16, 2003, Abern settled a customer dispute for $150,000.00 after customers alleged deceptive/fraudulent devices in the purchase of variable life and variable annuity policies. On April 1, 2004, Abern settled a customer claim for $99,000.00 after a client alleged that he sold unsuitable variable insurance policies on a frequent basis to generate commissions. On May 14, 2004, Abern settled a customer dispute for $145,000.00 after the customer alleged churning in variable annuity contracts.
On July 23, 2004, Florida’s Department of Financial Services / Department of Insurance fined Abern $35,000 and put him on probation for one year after he consented to allegations of fraudulent and deceptive practices to sell annuities, where he had insured persons sign blank forms, where Abern would sign insured persons’ names to applications and delivery receipts, and where he would falsely inform insured persons concerning actual premium costs. On September 28, 2004, Abern settled a customer dispute for $225,000.00 after a customer alleged that Abern paid premiums on insurance policies for clients without their knowledge or consent, then let the policies lapse.
On March 3, 2005, Abern’s former firm IMS Securities, Inc., discharged him amid allegations of continuous disregard for rules and regulations, failure to notify broker/dealer of a NASD audit, failure to notify broker/dealer of a Florida Insurance Dept. formal administrative hearing, and failure to cooperate with broker/dealer’s requests for documentation and communicate with broker/dealer.
On June 25, 2008, Abern settled a customer dispute after a customer alleged that he was not made aware of surrender charges from a 1035 Exchange that occurred. On March 2, 2010, Abern settled a customer dispute for $120,000.00 after the customer alleged unsuitable recommendations in the purchase of a variable annuity. On February 14, 2014, Abern settled a customer dispute for $28,000.00 after he was alleged to have switched the client from ING to a Hancock variable life policy that was unsuitable.
Guiliano Law Group
If you have been the victim of securities fraud and you have a complaint, you should consult with an attorney. The practice of Nicholas J. Guiliano, Esquire, and The Guiliano Law Group, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.
