Articles Tagged with insurance

Although a handful of states have requirements in place, surprisingly few Registered Investment Advisors (RIAs) across the country carry liability insurance to protect clients from their own wrongdoing leaving investors as the only party left to bear the brunt of losses when things go sideways.

The professional liability insurance industry for Registered Investment Advisors (RIAs) has been described by one in the industry as, “the Wild West.” There is immense uncertainty as to the number of independent RIAs who carry professional liability insurance as well as extreme variability within the specifics of the policies offered to RIAs. While there are some states that require RIAs to carry insurance, most states do not have mandates in place, and the federal government has yet to draft any laws on the matter.

At the forefront of requiring RIAs to maintain insurance coverage are Oregon and Oklahoma. In 2018, Oregon became the first state to pass legislation requiring RIAs registered with the state to carry professional liability insurance. The Oregon law requires RIAs to carry at least $1 million in coverage and to show proof of such coverage during the state’s licensing process. Similarly, in 2020, Oklahoma passed legislation requiring RIAs registered with the state to carry professional liability and cybersecurity insurance. Curiously, the Oklahoma law fails to indicate how much insurance coverage is required for RIAs. If you are an investor in Oregon, Oklahoma, or any other state, who believes you have lost money due to your RIA’s wrongdoing, you should consult with a Securities Law Firm like Malecki Law.

The securities and investment fraud attorneys at Malecki Law are interested in hearing from investors who have purchased Variable Universal Life Insurance (VUL) policies.

According to Investopedia, VUL policies combine a death benefit with investment feature.  The investment feature generally includes sub-accounts, as with other variable annuities, that invest in stocks and bonds, or mutual funds that have exposure to stocks and bonds.  While a VUL investment feature may offer an opportunity to gain an increased rate of return by investing in securities, it generally comes with higher management fees and commissions.  As a result, these commissions and fees must be weighed against the risk of loss in the securities purchased.  These risks must be disclosed to the investor prior to investment.

Issues surrounding VUL policies are not new.  A U.S. News and World Report article from 2011 highlighted that these types of policies generally come with higher fees, fewer investment options and sometimes surrender policies.

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against former stockbroker Winston Wade Turner.  Mr. Turner had been employed and registered with Pruco Securities, LLC, a broker-dealer, from July 2013 to August 2015, according to his publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA).

Per his BrokerCheck report, Mr. Turner was previously employed by MetLife Securities Inc. from December 2011 to July 2013.  Mr. Turner was discharged on August 3, 2015 for making an unsuitable variable annuity recommendation, providing inaccurate information to the company regarding the transaction, and for making payments to a client dissatisfied with the performance of their annuity, according to BrokerCheck records.

Mr. Turner was subsequently barred from associating with any FINRA securities firm according to a Default Decision entered in the FINRA Office of Hearing Officers on July 8, 2016, in Disciplinary Proceeding No. 2013038398401.  According to the Decision Mr. Turner violated: (i) FINRA Rules 4511 and 2010 by providing false information and engaging in deceptive acts in connection with recommendations of variable annuities; (ii) Section 10(b) of the Exchange Act, Rule 10b-5 and FINRA Rules 2020 and 2010  by fraudulently misrepresenting and omitting material facts to his customers; and (iii) FINRA Rules 8210 and 2010 by failing to provide testimony and information in FINRA’s proceeding.

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