scales of justice

Paul Rifaat Zakhary of Ocala Florida a stockbroker formerly registered with JP Morgan Securities LLC has been fined $5,000.00 and suspended for three months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon findings that Zakhary provided unsuitable investment recommendations to customers of JP Morgan and he neglected to preserve accurate records for the securities broker dealer relating to his activities. Letter of Acceptance Waiver and Consent No. 2019063806101 (Dec. 24, 2020).

According to the AWC, from January of 2018 to August of 2018, three JP Morgan customers had been advised by Zakhary to liquidate variable annuities and then buy fixed annuities with the proceeds. Zakhary assisted customers with closing out their annuities and initiating the purchase of new ones through JP Morgan.

FINRA stated that customers were advised to make annuity switches when Zakhary did not comprehend how variable annuities worked. The stockbroker failed to comprehend the subaccount options that were available to customers through their existing annuities. He also did not grasp that a 1035 exchange would enable customers to switch from existing annuities to new ones without customers experiencing tax consequences. FINRA stated that Zakhary did not have customers pursue the 1035 exchanges. He had customers instead liquidate annuities to buy new ones which resulted in unwarranted tax consequences.

FINRA found that Zakhary violated FINRA Rules 2010 and 2111.

Zakhary was discharged by JP Morgan Chase Bank on August 15, 2019 supported by accusations of him failing to conform to the company’s directives concerning customers’ managed brokerage transactions and annuity transactions.