Robert Michael Diehl, a former broker with Murphysboro, Illinois based Park Avenue Securities LLC, submitted a Letter of Acceptance, Waiver, and Consent (AWC) in which the Financial Industry Regulatory Authority (FINRA) found that he sold equity-indexed annuities (EIAs) to his firm’s customers but failed to properly notify the firm of the sales.
FINRA found that rather than having the customers complete the appropriate applications and submitting them to his member firm, Robert Diehl submitted the applications directly to the issuer of the EIAs. In doing so, Mr. Diehl bypassed the supervisory review and approval of the sales of the EIAs. FINRA’s findings state that Mr. Diehl neglected to disclose to Park Avenue Securities that he made the sales, for which he received approximately $55,500 in commissions by the EIA issuer without receiving permission for the sales from Park Avenue.
Robert Diehl, of Murphysboro, Illinois, was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in any capacity for 45 days. The fine must be paid either immediately upon Mr. Diehl’s re-association with a FINRA member firm following his suspension or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. The suspension was in effect from July 20, 2015 through September 2, 2015.
Equity-indexed annuities are complex products that are hybrid of both fixed and variable annuities. Their returns vary more than a fixed annuity, but not as much as a variable annuity. So, equity-indexed annuities are more risky than fixed annuities, but less risky than a variable annuity. Equity-indexed annuities offer a minimum guaranteed interest rate combined with an interest rate linked to a market index. Because of the guaranteed interest rate, equity-indexed annuities have less market risk than variable annuities. Equity-indexed annuities also have the potential to earn returns better than traditional fixed annuities when the stock market is rising. Equity-indexed annuities come with fees that are higher than any investment, and sales commissions to brokers can go as high as 12%. Surrender charges can go as high as 18%.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Mr. Diehl’s unauthorized EIA sales can bring forth claims to recover losses against Park Avenue Securities, which should have prevented Mr. Diehl from committing the above-described unapproved activity.
Have you suffered losses in your Park Avenue Securities brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is actively investigating and accepting clients with valid claims against Park Avenue Securities stockbrokers who may have made unapproved, unsuitable recommendations, and/or other unauthorized broker misconduct.
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 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.