Philip Eckstein, a former MetLife Securities Inc. broker, was permanently barred from association with any members of the Financial lndustry Regulatory Authority (FINRA) after he converted $10,000 of an elderly customer’s money to his own use.
FINRA announced the sanction in a February 8, 2012 Order accepting Eckstein’s offer of settlement after a disciplinary proceeding was filed by FINRA’s Department of Enforcement in October 2011. The National Adjudicatory Council also accepted the settlement on Feb. 8.
In addition, Eckstein was fined $8,000 the Connecticut Insurance Department and ordered pay restitution and legal fees to the wronged customer per a stipulation and final order he signed in July 2010. He was also suspended from the insurance industry for one year.
According to the FINRA order accepting the offer of settlement, in 2004 Eckstein misappropriated $10,000 from a customer identified only as RR, who is 78 years old. At the time, he was registered with MetLife Securities as an “investment company products/variable contracts limited representative.” Eckstein started with MetLife Securities in June 1998 and remained there until November 2009, when he was fired after the firm discovered his misappropriation.
Until July 2007, Eckstein was also registered with the Metropolitan Life Insurance Co., with an affiliate of MetLife Securities. He was licensed to sell insurance in the state of Connecticut.
RR knew Eckstein because he had prepared her father’s tax returns for many years, the order said. First she hired him to prepare her tax returns, which he did for several years. Then in June 2004, RR told Eckstein she wanted to use his services to purchase $30,000 in fixed annuities.
Eckstein told her to write two checks, one payable to MetLife for $20,000 and another payable to himself for $10,000. At the time, RR was a customer of the Metropolitan Life Insurance Co., but she was not a customer of MetLife Securities, the parent company.
Although Eckstein told RR that he had purchased the two annuities with her $30,000, in reality he had only purchased one annuity contract for about $20,000. The other $10,000 went straight into Eckstein’s personal account and he used the money as his own, the order said.
On many occasions over the years that followed, RR requested information on the $10,000 annuity she believed she had purchased in June 2004. Each time Eckstein told RR that it was difficult for him to get the information because MetLife Securities’ computer systems could not communicate with each other, and that her file was being handled by different MetLife Securities employees at different times.
Finally, in August 2009, MetLife Securities informed RR’s attorney that Eckstein had never purchased an annuity for her with the $10,000, the order said.
By this time the Connecticut Insurance Department had investigated the same events, and in 2010 MetLife Securities reimbursed RR for the non-existent annuity, paying $10,000 plus $2,800 in interest. Eckstein was ordered to repay $7,700 that RR had loaned to him, and to pay her legal fees.
As a result of Eckstein’s conduct, FINRA filed its disciplinary proceeding. The first cause of action was for misappropriation in violation of the general standard of business conduct rules of the National Association of Securities Dealers (NASD). In addition, between 2004 and 2009, Eckstein lied to RR, serving up false explanations to cover his theft of the $10,000 in violation of FINRA rules, the order said.
The second cause of action was for failure to appear for on-the-record testimony, also in violation of FINRA rules. FINRA sent multiple letters to Eckstein requesting that he appear to testify in the spring of 2011, but he failed to appear.
Eventually, Eckstein made his offer of settlement, neither admitting nor denying the allegations, but consenting to the sanction and the entry of findings, which will become part of his permanent disciplinary record and may be considered in any future actions brought by FINRA, the order said.
In May 2010, Eckstein was hired by Park Avenue Securities, and the firm attempted to reinstate his previous registrations. He was terminated a few months later, however, due to the investigation by the Connecticut Department of Insurance, according to FINRA public disclosure records. Eckstein had not previous been disciplined by disciplinary FINRA.
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