James Keith Cox, of Baton Rouge, Louisiana, a stockbroker formerly registered with Sterne, Agee & Leach, Inc., has been fined $10,000.00 and suspended for four months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he made unsuitable investment recommendations to a firm’s customer and engaged in outside business activities. Letter of Acceptance, Waiver and Consent, No. 2015047812901 (June 6, 2017).
According to the AWC, in September of 2014, investment recommendations were made by Cox to a fifty-nine-year-old customer, NR. Particularly, Cox recommended that NR exchange several existing annuities with other annuity products. Yet, all the annuities that Cox recommended to be replaced contained existing guaranteed income riders slated to provide the customer with a guaranteed income stream equaling three times the amount that NR paid for each policy.
Apparently, NR was particularly interested in accumulating the value of a future guaranteed income stream during the point in which Cox made recommendations for her to switch policies. The AWC stated that the new policies Cox recommended to the customer did not contain guaranteed income streams, not did it contain the potential to provide the customer with as much income as the existing policies were capable of providing. Moreover, death benefits on NR’s existing policies were slated to provide a higher death benefit to the customer then the policies pitched by Cox. Finally, the new policies reportedly exposed the customer to longer surrender penalty periods. Cox evidently earned $25,460.00 in commissions in connection with the customer’s annuity exchanges.
The AWC stated that Cox lacked an adequate basis to conclude that the five annuity policies recommended by him were suitable for the customer. Cox apparently made the recommendations without regard to NR’s objectives for investing, tolerance for risk, and financial status. Consequently, Cox’s conduct was found by FINRA to be violative of FINRA Rules 2010, 2111 and 2330.
The AWC additionally stated that in September of 2014, Cox engaged in outside business activities by providing consulting services to a customer, wherein Cox was paid $2,500.00 to advise the customer about constructing an office for a medical practice that the customer operated. Cox purportedly failed to disclose his arrangement to the firm prior to providing consulting services; conduct FINRA found to be violative of FINRA Rules 2010 and 3270.
Financial Industry Regulatory Authority (FINRA) Public Disclosure reveals that Cox has been identified in four customer initiated investment related disputes containing allegations of Cox’s misconduct while employed with Stanford Group Company, Securities America, Inc., and Sterne, Agee & Leach, Inc. Specifically, on October 14, 2009, a customer filed an investment related civil action involving Cox’s conduct, in which the customer requested at least $5,000.00 in damages based upon allegations that Cox breached his fiduciary duties to the customer and made misrepresentations about certificate of deposit investments effected in the customer’s account.
Subsequently, on February 18, 2014, a customer initiated investment related arbitration claim involving Cox’s conduct was settled for $25,000.00 in damages based upon allegations of breach of contract, breach of fiduciary duty, misrepresentation, and unsuitability in reference to Cox’s part in effecting the customers’ purchases of mutual funds, stocks, and real estate investment trusts.
Further, on July 17, 2014, another customer filed an investment related civil action involving Cox’s conduct, in which the customer requested more than $5,000.00 in damages based upon allegations that he made false representations about certificate of deposit investments issued by Stanford International Bank, Ltd., and effected unsuitable purchases of the products in the customer’s account. Moreover, on January 21, 2017, a customer initiated investment related arbitration claim involving Cox’s conduct was settled for $480,000.00 in damages based upon allegations that Cox deceived the customer in the course of facilitating replacements of the customer’s annuity products.
Cox’s registration with Sterne, Agee & Leach, Inc. was terminated on July 7, 2015. Cox was registered with Stifel, Nicolaus & Company, Inc. from July 7, 2015 to April 26, 2017, at which point he was terminated based upon the settlement of a customer dispute regarding allegations of Cox’s wrongdoing, as well as his involvement in undisclosed outside business activities.
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