Walter Marino, of Bohemia, New York, a stockbroker formerly registered with Legend Equities Corporation, was charged by Financial Industry Regulatory Authority (FINRA) in a Complaint alleging that he made unsuitable investment recommendations to customers and misrepresented the source of customer funds used to purchase investments. Department of Enforcement v. Walter Marino, No. 2015046537501 (Apr. 24, 2017).
According to the Complaint, in 2014, at a time when Marino was registered with Legend Equities Corporation, he recommended that customers exchange their existing variable annuity products with new annuity products despite the recommendations having been unsuitable for the customers. The Complaint alleged that customers did not gain any benefit from exchanging their annuities pursuant to Marino’s recommendations, and sustained financial losses even though an estimated $60,000.00 in commissions were paid to Marino to effect the transactions.
Specifically, the Complaint stated that customer AA, a retired widower, replaced her Jackson National Life Insurance Perspective II annuity, with a Variable Annuity Life Insurance Company annuity, based upon Marino’s recommendations. The Jackson annuity reportedly cost the customer 1.25% due to administrative fees and mortality and expenses charges; and contained a five-year restriction in which withdrawals exceeding a certain amount could be assessed a surrender penalty. In May of 2014, the replacement of the annuity apparently caused AA to incur a seven percent surrender penalty totaling $82,523.23; however, this penalty was not made known to the customer by Marino.
Moreover, the replacement of the Jackson annuity with the VALIC annuity was not executed via a tax-free exchange, which resulted in the customer incurring a taxable gain of $128,164.11. Marino ultimately raked in $50,000.00 in commissions based on the customer’s purchase of the VALIC product, and additionally earned some of the 1.5% in advisor fees charged to the customer by Legend Advisory Corporation. Additionally, the customer’s annual expenses were alleged by FINRA to have gone from 1.25% to at least 1.6%, and was placed into another restrictive surrender penalty period. FINRA alleged that Marino’s recommendation was not suitable based upon customer AA having to incur a lofty surrender charge and taxable gain in the process of purchasing an annuity, wherein the costs of the new annuity were not justified.
The Complaint further revealed that customers TM and MM, a married couple, were also exposed to Marino’s unsuitable recommendations. The customers apparently sustained substantial tax consequences by liquidating an existing annuity to purchase a new one rather than effecting a tax-free exchange, and incurred costs with the new annuities which exceeded those of the customers’ prior annuities. FINRA alleged that Marino’s conduct in this regard was violative of FINRA Rules 2010, 2111, and 2330(b).
Apparently, Marino falsely stated the source of the affected customers’ funds utilized for the annuities offered via VALIC. Apparently, Marino claimed that customers had not replaced annuities but instead purchased the products anew. The Complaint alleged that Marino’s untrue representations concerning customers’ funds was conduct violative of FINRA Rules 2010. Moreover, Marino was alleged to have misrepresented the firm’s records by concealing the customers’ sources of funds and claiming that customers had not replaced existing annuities. The Complaint alleged that Marino’s conduct was violative of FINRA Rules 2010 and 4511.
Financial Industry Regulatory Authority (FINRA) Public Disclosure reveals that Marino has been identified in twelve customer initiated investment related disputes containing allegations of his wrongdoing while associated with S. Oakmont, Berry-Shino Securities, Brill Securities, and Legend Equities Corporation. Particularly, on October 25, 2004, a customer initiated investment related arbitration claim involving Marino’s conduct was settled for $79,000.00 in damages based upon allegations including breach of fiduciary, negligence, fraud, unsuitability, violation of NASD Rules, as well as violations of the Securities and Exchange Act and Penny Stock Reform Act. The customer additionally alleged that Brill Securities and Berry-Shino Securities, Inc. failed to supervise Marino’s activities.
Subsequently, on October 14, 2016, a customer initiated investment related complaint regarding Marino’s activities was resolved for $225,000.00 in damages based upon allegations that Marino made misrepresentations to the customer concerning the replacement of the customer’s variable annuity. Between March 4, 2016, and November 17, 2016, nine customer initiated investment related disputes concerning Marino’s conduct were pursued, wherein customers alleged that Marino induced the customer’s investment purchases based upon misrepresentation and excessively charged fees in customers’ accounts. Six of the customer disputes have already been resolved for a total of $205,500.00 in damages.
Legend Securities ceased operations on January 1, 2017.
Since 1994, Marino has been associated with fourteen different broker dealers, twelve of which have been expelled by securities regulators for violation of federal securities laws or are otherwise defunct. #cockroach
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