Winston Wade Turner of Sarasota, Florida, a registered representative with Pruco Securities, LLC, and MetLife Securities, Inc., was barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity per a FINRA Office of Hearing Officers Default Decision containing findings that Turner committed fraud pertaining to customers’ variable annuity purchases, partook in unauthorized private securities transactions, and failed to cooperate with FINRA in an investigation into allegations of his misconduct. Department of Enforcement v. Turner, No. 2013038398401 (July 8, 2016).
According to the Decision, from late 2012 through July 2015, Turner deceived several customers regarding the exchanges and sales of variable annuity products. Turner purportedly acted willfully to evade his firms’ supervision concerning the customers’ purchases of variable annuities that Turner recommended and ultimately sold. According to FINRA, the products were subject to a heightened review due to high commissions, overall complexity, fees and costs, and associated risk factors with such annuities.
FINRA found that Turner’s approach, which FINRA deemed deceptive, was geared towards preventing his firm from becoming cognizant that Turners’ customers were being induced by him to sell their positions in existing annuities or other investment products and purchase new annuity products through Turner. To execute the scheme, Turner seemingly urged customers to cash out existing annuities and have funds directed to their bank accounts, just prior to customers purchasing new annuity products.
By customers acting on Turner’s instructions, customers’ annuity purchases would not appear to Turner’s firm as replacements of former annuities, but rather, new annuity purchases with funds coming from the customers’ bank accounts. Turner reportedly submitted documents concerning annuity purchases to his firm that omitted the true source of the customers’ funds. The Decision further stated that Turner was dishonest to Pruco’s compliance personnel regarding the sources of funds used in customers’ purchases when Turner was questioned regarding such. FINRA found that Turner violated FINRA Rule 2010 as a result of his conduct in this regard.
The Decision additionally stated that customers were deceived, via Turner, regarding the guarantees associated with such annuity products. Turner allegedly led customers to believe that they would receive a minimum rate of interest (growth) in the cash value of such products, when such guarantees which increased in value were merely associated with annuitization or other income riders (guarantees associated with increased income, not a principal increase).
For example, Turner led customer CP to rollover assets from her 401(k) in order to invest in a MetLife variable annuity, where such customer was assured by Turner to receive 4.5% in yearly guaranteed interest. Yet, such guarantee was only associated with a guaranteed lifetime income stream (which would actually reduce the market value of CP’s investment via guaranteed withdrawals) as opposed to a guarantee which would increase the market value of CP’s principal investment(s).
The Decision indicated that Turner was apprised of the fact that there was no such guarantee with respect to CP’s (or other customers’) market value increasing in the manner in which he represented. FINRA found that Turner’s conduct was violative of Securities Exchange Act of 1934, Rule 10b-5, and FINRA Rules 2010 and 2010.
The Decision reported that Turner also misstated to CP that there would be no tax consequences regarding withdrawals. FINRA alleges that Turner either knew, or must have acted recklessly in not discovering, that such tax consequences existed in CP’s case prior to representing to CP otherwise.
The Decision additionally stated that Turner also disguised the nature of payments to a customer, leading such customer to believe that the insurance company was providing the customer with a guaranteed payment when in fact the funds were paid by Turner personally.
The Decision further indicated that with respect to multiple customers’ exchanges into investment products, Turner had prepared and submitted to his firm false applications, customer information forms, and customer questionnaires. FINRA found that Turner violated FINRA Rule 2010 and 4511 in this regard.
According to the Decision, when Turner was associated with Pruco, he failed to properly disclose his outside business activities concerning his appointments with nine insurance companies that were not associated with Pruco. Turner apparently earned commissions in excess of $130,000.00 via association with the outside insurance companies. FINRA found that Turner’s conduct in this regard was violative of FINRA Rule 3270 and 2010.
FINRA also found that Turner induced customers to purchase securities away from Pruco. FINRA found that Turner’s failure to gain proper authorization from his firm concerning certain private securities transactions was violative of FINRA Rule 3040 and Rule 2010.
Finally, prior to the Decision, FINRA found that Turner failed to appear for recorded testimony concerning allegations of his misconduct, and additionally failed furnish all information requested by FINRA concerning such. FINRA found that Turner violated FINRA Rule 8210 and 2010 in this regard.
Public disclosure records reveal that Turner has been subject to twenty-one disclosure incidents. On January 30, 2014, Turner settled a customer dispute for $19,970.47 amid allegations of misrepresentations made by Turner in connection with a variable annuity. On March 27, 2014, Turner settled a customer dispute for $1,853.31 after similar allegations were made. On August 3, 2015, Pruco terminated Turner amid allegations of Turner’s unsuitable variable annuity recommendations and concealing to his firm certain information concerning purchases of customers’ annuity purchases.
On December 22, 2015, Turner became subject to a customer dispute in which a customer alleged misrepresentations concerning guarantees associated with annuity purchases. Particularly, the client alleged that Turner stated that the customer’s investment was guaranteed a 5% return, while omitting that the client’s funds would be invested in aggressive positions within a variable annuity; that the customer could incur surrender penalties; and falsified the customer’s risk tolerance, investment objectives, and investment experience. On January 5, 2016, Turner became subject to a pending customer dispute in which a customer is seeking $75,200.00 after alleging similar misrepresentations concerning guaranteed returns.
On January 20, Turner settled a customer dispute for $25,087.24. On February 25, 2016, Turner was named in the FINRA Complaint which prompted FINRA’s Default Decision. Following this, on March 8, 2016, Turner was named in a customer dispute, in which the customer alleged a wrong committed by Turner with respect to a check issued for investments.
On March 16, 2016, Turner settled another customer dispute for $29,737.15. On March 28, 2016, Turner became subject to a pending customer dispute, in which a customer requested $19,000.22 after claiming that Turner failed to disclose surrender charges associated with an annuity, and failed to address charges associated with a market value adjustment on such annuity. The customer further alleged that Turner made misrepresentations to the customer regarding the tax consequences of the annuity, and failed to fully disclose the risks associated with such investments.
On May 2, 2016, Turner settled yet another customer dispute for $20,263.78. On May 31, 2016, Turner was named in a customer dispute, in which a customer requested $27,399.00 after claiming that Turner did not properly disclose facts concerning tax consequences in the customer’s surrender of a variable annuity. Finally, Turner settled a customer dispute on June 6, 2016 for $75,507.39 after a claimant alleged that Turner made misrepresentations concerning the guaranteed growth, as well as surrender charges associated with his insurance policies.
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