Thomas M. Phillips II of Columbus Ohio, a registered representative with Wesbanco Securities, Inc., was censured and fined $10,000 after consenting to findings that he misstated fees associated with variable annuity transaction switch forms. Letter of Acceptance, Waiver and Consent, No. 2014039231201 (Dec. 4, 2015).
According to the AWC, from November 2013 – September 2014, while Phillips was employed by Wesbanco Securities, Inc., he had prepared Investment Exchange Acknowledgement Forms (variable annuity switch forms) in connection with sixteen variable annuity transactions. The AWC stated that the variable annuity switch forms were signed and acknowledged by each of his customers and submitted to his firm for review.
The AWC noted that the forms contained information concerning the basis of replacing one variable annuity with another one, including the fees associated with each policy. Expenses commonly associated with variable annuity products include mortality and expense charges, administrative fees, and insurance company rider fees.
FINRA found that in each of the sixteen transactions, Phillips had misstated the fees of the variable annuities being replaced or acquired (or both in some cases). FINRA found that by misstating information pertaining to the fees associated with the replaced and/or new variable annuities on the variable annuity switch forms submitted to his firm, he had caused his firm’s books and records to be inaccurate. FINRA found that Philips had violated FINRA Rules 4511 and 2010 in this regard.
Firms and individuals, quite obviously, are prohibited from unauthorized use or borrowing of a customer’s funds or securities, forgery, non-disclosure or misstatement of material facts, and manipulations and various deceptions. These activities are also subject to the civil and criminal laws and sanctions of federal and state governments.
Public disclosure records reveal that Phillips was subject to a customer dispute on October 1, 2008, where a customer alleged that the variable annuity product he purchased was misrepresented – in that he was told that the annuity was risk free and that principal would be preserved.
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