The Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) alleged that Kenneth Statly of Grand Ledge, Michigan fabricated insurance claims for two customers in violation of FINRA Rule 2010. Statly entered the securities industry in 1997 when you became associated with State Farm VP Management Corp. (SFVPMC). In 1998, Statly became registered as an Investment Company Products/Variable Contracts Representative and was employed by SFVPMC through February 2014.
Without admitting or denying the findings, and sole for the purpose of the proceeding, Statly agreed to the allegations that on three separate occasions in 2013, he fabricated or falsified insurance claims for the purpose of offsetting customers’ premium increases which he then settled and claimed. FINRA also alleged that on one occasion in 2013, Statly settled and paid an insurance claim that he knew to have been fraudulently inflated willfully violating FINRA Rule 2010.
While associated with SFVPMC as a registered representative, Statly was also an insurance agent for State Farm Insurance Company (State Farm), the parent company of the firm. FINRA found that on two occasions in 2013, Statly fabricated insurance claims to offset increases on those customers homeowners insurance policy premiums. Statly allegedly did these fabrications without his clients knowledge and did so, using is agents draft authority. For one customer who claimed damages due to a broken frozen pipe, Statly wrote a State Farm check for $188 using his agents draft authority and told the client the check was a reimbursement of a premium overpayment, not a payment of the claim. On another occasion, Statly allegedly offset the premium increase for another customer who had a claim for stolen automobile wheels and tires. Once again, without his client’s knowledge, Statly used his agents draft authority to write a State Farm check for $682 to the customers stating it was a reimbursement of a premium increase and not a payment of claim.
Additionally, in 2013, Statly allegedly falsified another claim to offset his customer’s deductible. Statly’s customer made a claim under his homeowner’s policy and submitted a receipt in support of the claim. Statly allegedly altered the receipt in support of the claim to offset the customer’s deductible. Statly then settled and paid the falsified claim using his agents draft authority. Lastly, FINRA found that Statly paid a claim based on information he knew was altered. This was in regard to a homeowner’s repair claim that had been inflated to satisfy a deductible. FINRA alleged that Statly nevertheless settled an paid the falsified claim violating FINRA Rule 2010.
Due to his alleged actions, Statly was barred from association with any FINRA member in any capacity.
Stockbrokers have been known to engage in many types of practices which violate industry and firm rules, practices, and procedures. In order to protect customers from stockbroker misconduct, FINRA rules require broker-dealers State Farm to establish and implement a reasonable supervisory system. The implementation of the rules require supervisors to monitor employees to ensure they comply with federal and state securities laws, securities industry rules and regulations, and the firm, such as State Farm own policies and procedures. If broker dealers and/or their supervisors do not establish and implement these protective measures, they may be liable to investors for damages which flow from the misconduct. As a result, investors who have suffered losses because of their stockbroker’s unlawful or prohibited conduct can file a claim to recover damages against broker dealers like State Farm, which should consistently oversee its employees in order to prevent stockbroker misconduct.
Have you suffered losses in your State Farm investment account due to your stockbroker’s misconduct? 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 stockbrokers for unsuitable recommendations, misrepresentations, and/or other unauthorized and prohibited conduct.
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 35 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 post a comment, call (800) 732-2889, send Mr. Pearce an email at firstname.lastname@example.org, and/or visit our website at www.secatty.com for answers to any of your questions about this blog post and/or any related matter.