FINRA Fines Prudential Annuities Distributors, Inc. $950,000 for Failing to Prevent Theft of $1.3 Million From Elderly Customer’s Variable Annuity Account

On July 19, 2016, FINRA announced it fined Prudential Annuities Distributors, Inc. the sum of $950,000 for failing to detect and prevent a scheme that resulted in the theft of approximately $1.3 million from an 89-year-old customer’s variable annuity account. According to FINRA, Prudential “repeatedly failed to adequately investigate “red flags” that Travis A. Wetzel, a former registered sales assistant at LPL Financial and since-convicted felon, was transferring money from the customer’s Prudential variable annuity account to a third-party bank account in his wife’s maiden name.”   FINRA previously barred Wetzel in May 2013. Prudential Annuities and LPL reimbursed the customer in 2013.

This sanction is significant because it is based on merely “red flags” that appeared to the broker-dealer, not on the brokerage’s actual knowledge of the violations.  Often brokerage firms will argue that they should not be sanctioned because they did not have actual knowledge that a violation was occurring.  This seems to be a new direction for FINRA.  Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, said, “Firms must ensure that their supervisory systems and procedures are designed to recognize and follow up on red flags. There were numerous red flags raised over the course of this scheme, and Prudential Annuities Distributors’ failure to adequately respond to them allowed an unscrupulous actor to prey on an elderly customer.”

This sanction also highlights FINRA’s commitment to protect senior investors.   FINRA has established a hotline for seniors to call for help or assistance if they have any concerns or issues with their accounts or investments at  FINRA’s Securities Helpline for Seniors at (844) 57-HELPS.

At Carlson & Associates, P.A., our securities fraud lawyers have the experience to help protect you. If you have been a victim of securities fraud in South Florida, please contact our Miami office today at 1-(305)-372-9700 to schedule a initial legal consultation.