FINRA Bars Broker for Fraudulent Variable Annuity Exchange, Falsifying Documents
The Financial Industry Regulatory Authority has barred a former Navy Federal Brokerage Services advisor for allegedly engaging in securities fraud, making unsuitable recommendations, and falsifying investment documents.
The Financial Industry Regulatory Authority has barred a former Navy Federal Brokerage Services advisor for allegedly engaging in securities fraud, making unsuitable recommendations, and falsifying investment documents.
FINRA claims that Jonathan Sweeney misrepresented and omitted certain material information when he recommended that his customer surrender two variable annuities and use the proceeds to purchase two new ones.
Specifically, Sweeney allegedly told his customer that the new annuities had the same benefits as the original annuities, which was false. Most significantly, the original VAs had guaranteed living benefits with enhanced growth features, and one had guaranteed death benefits with an annual step-up in value.
FINRA also claims that Sweeney did not tell the customer that the benefits and growth features would be lost if the original annuities were surrendered. Approximately 72 percent of the client’s overall investable assets were in the annuities.
FINRA alleges that he had no reasonable basis to believe the switch was suitable considering the age, retirement status, and financial needs of his client.
In addition, between December 2011 and April 2016, Sweeney allegedly reused original signatures from forms his customers had signed to complete new, separate forms that his customers had not signed, and then submitted the forms to Navy Federal as original documents.
The forms included, among others, new account applications, advisory agreements, transaction cover sheets, IRA rollover and transfer forms, IRA applications, mutual fund applications, variable annuity applications, and notices and disclosure documents for variable annuity investments.
Navy Federal terminated Sweeney in April 2016 for failing to follow account signature protocols. The firm noted that it did not believe that he intentionally deceived customers, but nevertheless, his actions warranted termination.
Sweeney, who held FINRA Series 6, 7, 63 and 65 licenses, was previously employed by USAA Financial Advisors, USAA Investment Management, and Vanguard.
