Alfred K. Chan, of Oakland, California, a stockbroker with Signator Investors, Inc., was fined $10,000.00 and suspended for six months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity after consenting to findings that he engaged in unauthorized outside business activities, and distributed unapproved and unbalanced sales materials to prospective customers. Letter of Acceptance, Waiver and Consent, No. 2013039301501 (Mar. 22, 2016).
According to the AWC, from April 1, 2011 through September 30, 2013, Chan had sold securities products via his firm, while also selling insurance contracts to customers via an insurance agency. Despite Chan having been approved for utilizing the insurance agency as an outside business activity, Signator required that Chan disclose to the firm information pertaining to his index annuity sales.
The AWC stated that Chan never submitted to Signator his one-hundred and five indexed annuity transactions, which totaled $2,500,000.00 in purchases. Chan was reportedly compensated for his indexed annuity sales, yet failed to keep Signator apprised of his compensation associated with the sales of such insurance products. FINRA found that Chan engaged in unauthorized outside business activities in this regard, and found that he violated Rules 2010 and 3270 as a result.
The AWC further reported that Chan attempted to retrieve approval from Signator concerning a newspaper advertisement that Chan wished to have distributed to prospective clients pertaining to two seminars he intended on conducting in September, 2013. The AWC stated that Chan actually removed his request to his firm for approval of the newspaper advertisement before receiving approval, yet published such advertisement anyway. Apparently, forty individuals showed up to Chan’s seminars.
FINRA found that the advertisement pertaining to Chan’s seminars were unfair and unbalanced, as it referenced the benefits of investing in a non-traded real estate investment trust (REIT) without also properly disclosing the risks of such investment. Further, FINRA found that Chan failed to gain the proper approval for such advertisement prior to its distribution. Chan was found by FINRA to have violated FINRA Rule 2010 and NASD Rules 2210(b)(1) and 2210(d)(1)(A) as a result.
Public disclosure records via FINRA’s BrokerCheck reveal that Chan has been subject to four disclosure incidents. On October 16, 2013, customers lodged a complaint against Chan, claiming that Chan had sold customers unnecessary insurance products that caused them to bear hefty surrender penalties.
On November 21, 2013, Signator Investors Inc. terminated Chan amid allegations of Chan’s failure to abide by the firm’s procedures and policies concerning unauthorized indexed annuity sales; use of unauthorized advertisements; and the unauthorized seminars that Chan conducted.
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