Peter Michael Terlecky III of Amherst New York a stockbroker formerly employed by MML Investors Services LLC is the subject of a customer initiated investment related written complaint which was settled on May 13, 2016 to resolve accusations that during the time Terlecky was associated with the firm he made misrepresentations to the customer concerning a variable annuity while advising the customer to use variable annuity funds to establish a fixed annuity. Apparently, the firm rescinded the customer’s annuity and returned the customer’s funds in order to settle the complaint.
Financial Industry Regulatory Authority (FINRA) Public Disclosure reveals that Terlecky is referenced in two more customer initiated investment related disputes pertaining to accusations of his violative conduct during the time that he was associated with Princor Financial Services Corporation. Particularly, on September 7, 2004, a customer filed an investment related complaint regarding Terlecky’s conduct where the customer sought $13,985.00 in damages supported by accusations that the customer was not provided adequate information about the sales charges or breakpoints in reference to Class B mutual fund shares purchased in the customer’s account.
On March 8, 2010, another customer filed an investment related complaint involving Terlecky’s activities in which the customer requested $21,000.00 in damages supported by allegations that omissions had been made to the customer concerning the surrender charges that would be assessed in the event the customer opted to terminate a variable annuity contract.
FINRA Public Disclosure additionally confirms that Terlecky has been subject of two regulatory actions – one by FINRA and one by Maryland Division of Securities. For example, Terlecky was fined $10,000.00 and suspended from associating with any FINRA member in any capacity according to an Office of Hearing Officers Order Accepting Offer of Settlement containing findings that Terlecky violated the firm’s policies through concealing the fact that an estimated $2,300,000.00 in variable annuity purchases had been funded through the replacement of customers’ former annuities rather than purchased anew. Department of Enforcement v. Peter Michael Terlecky Disciplinary Action No. 2011029089201 (June 3, 2015).
According to the Order, Terlecky bypassed the compliance and supervisory procedures of the firm through his concealment and failure to document twenty-six variable annuity purchases as replacements. In all of those cases, customers’ annuities purchases were reportedly made possible through the sale of customers’ existing variable or fixed annuities. Terlecky evidently structured customers’ transactions to take place by a two-step process – customers first sold their annuities and had their funds placed into a money market, and the money shortly thereafter was transferred from the customers’ money market accounts to the annuities.
The Order stated that in the course of effecting the purchases, Terlecky claimed on the new account documentation that customers were rolling over funds from an individual retirement account. However, the funds used for purchases of customers’ annuities came from elsewhere – the annuities. Evidently, by avoiding the firm’s compliance and supervisory procedures in this respect, Terlecky generated a larger amount of commissions. Meanwhile, Terlecky reportedly caused customers’ harm through his omissions of important information concerning the exchanges, precluding customers from legitimately comparing their existing annuities to the new annuities to determine if the exchanges of their annuities was worthwhile. Further, Terlecky reportedly caused customers to be subject of lengthy surrender penalties by placing them in the replacement annuity products. FINRA found Terlecky’s circumvention of the firm’s procedures and falsification of documents to be violative of FINRA Rule 2010.
Moreover, Terlecky was twice terminated from a brokerage firm founded on accusations of his misconduct. In particular, Terlecky was terminated by Princor Financial Services Corporation on August 25, 2011 supported by allegations that incomplete and inaccurate information had been provided by Terlecky in regard to a customer’s variable annuity replacements. Apparently, the firm referenced several occasions in which Terlecky either failed to complete the documents or failed to furnish those documents to customers or the firm. Then, on July 2, 2015, Terlecky was discharged by MML Investors Services based upon him being suspended by FINRA for violating FINRA Rules.
