Darrell Glynn Frazier, a former broker at New York, New York-based Park Avenue Securities LLC, submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the described sanction and the entry of the Financial Industry Regulatory Authority's (FINRA) findings that he made false representations in connection with the sale of variable annuities. Mr. Frazier told customers that they would earn a return of 7 percent or more by purchasing variable annuity products and that the principal amount they invested through the variable annuity would be guaranteed against loss. Mr. Frazier assured one customer that he would not be charged annual fees on his variable annuities and advised another customer that he would only make money from the annuity purchase if the customer made money. All of these representations and assurances were false. The findings also stated that some of the customers separately contacted Mr. Frazier to question why a particular annuity was not performing as expected and why the values of their annuities appeared to be decreasing. Mr. Frazier assured them that they were receiving the 7 percent return and that their principal was safe. The findings also included that Mr. Frazier separately told customers that the 7 percent return had not yet been added to their annuity but soon would be; that an annuity was making money but that the 7 percent return would only be reflected on annual, not quarterly, statements; and that for various reasons, he had not been able to obtain documents reflecting the 7 percent return. In response to why the value of his annuity seemed to be declining, Mr. Frazier promised to look into the matter, but he never did.
In addition, FINRA found that Mr. Frazier made unsuitable allocation recommendations to his variable annuity customers, who had little investment experience. All were at or near retirement age, were of moderate means, and expressed concerns about losing their principal. Nevertheless, at various times during the terms of their variable annuity contracts, Mr. Frazier allegedly recommended that the customers allocate most or all of their annuity assets to a single investment portfolio, and the portfolio he often recommended involved high-risk investments. According to FINRA, Mr. Frazier's recommendations to over concentrate assets in high-risk investments were unsuitable for customers who were at or near retirement, had only moderate means, and were concerned about preservation of principal. FINRA also found that Mr. Frazier recommended that customers take out home mortgages from their paid-off homes and invest the proceeds into variable annuities, and some customers followed this advice. FINRA claimed that Mr. Frazier convinced customers to use profits from their annuities to purchase duplicative or excessive insurance policies and arranged for systematic withdrawals from the variable annuities to pay the insurance premiums. Mr. Frazier allegedly recommended that a customer, whose variable annuity was beyond the surrender period and was no longer subject to deferred sales charges, sell the annuity and invest the proceeds in a new variable annuity, exposing her to a new period of deferred sales charges. These strategies reportedly produced additional compensation for Mr. Frazier but were unsuitable for the customers.
Further, FINRA determined that Mr. Frazier often completed or partially completed forms that the customers were required to fill out when applying for a variable annuity contract. Several of the forms Mr. Frazier completed were inaccurate; he overstated the net worth and income of customers and inaccurately characterized their risk tolerances. Mr. Frazier regularly had customers sign undated, blank brokerage forms. The signed, blank forms were located in his files along with correspondence specifically instructing customers to sign but not date blank forms. As a result his conduct, Mr. Frazier willfully violated Section 10(b) of the Securities Exchange Act of 1934, FINRA Rules 2010 and 2020, and NASD Rules 2110 and 2120. Mr. Frazier, of Dublin, Ohio, was barred from association with any FINRA member in any capacity.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement these protective measures, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to misrepresentations and unsuitable recommendations by their broker can bring forth claims to recover damages against broker-dealers like Park Avenue Securities LLC, which should consistently oversee its brokers' activities in order to prevent the above described prohibited conduct.
Have you suffered losses in your Park Avenue Securities LLC account due to misrepresentations and/or unsuitable recommendations? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Park Avenue Securities LLC stockbrokers who may have engaged in misconduct and caused investment losses.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 33 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at email@example.com for answers to any of your questions about this blog post and/or any related matter.