August 23, 2013
Here we go again. Equity Indexed Annuities -- the old EIAs. And, on top of that, another round of a registered person signing a customer's name on a bunch of documents.
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Arthur J. Penna submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Arthur J. Penna, Respondent (AWC 2012033554901, August 20, 2013).
Penna has been in the securities industry since 1978 and was employed by several firms as a registered representative. The AWC asserts that Penna had no prior relevant disciplinary history with FINRA, the Securities Exchange Commission, any state securities regulator or any other self-regulatory organization.
The AWC alleges that from 2009 through 2011, Penna affixed the signature of one of his customers to Equity Indexed Annuity applications and their attendant documentation.
Additionally, the AWC alleges that in April 2012, a second customer of Penna's sought an annuity from a company with which Penna was not registered. In order to process that request, Penna purportedly asked a business associate, who was registered with the annuity company, to effectuate the transaction as agent-of-record. In furtherance of this arrangement, however, Penna is described as having "coordinated the execution of the annuity documents." Moreover, upon realizing that this second customer had failed to sign a portion of the annuity application, Penna signed the customer's signature but failed to inform the agent-or-record of that act.
FINRA deemed the above conduct to constitute violations of FINRA Rule 2010, and in accordance with the terms of the AWC, the self-regulatory organization imposed upon Penna a $5,000 fine and a 6-month suspension from associating with any FINRA member in any capacity.
Bill Singer's Comment
So, waddawe got here? We got a registered person signing one, and only one customer's signature to some EIA docs -- and then, for good measure, signing a second, but only a second customer's signature. Does the fact that it's only one or two customers matter -- I mean, you know, is that some mitigation? NO! And as readers of BrokeAndBroker.com know, I have begged, pleaded, and cajoled industry folks to not engaged in any so-called "customer service" short-cuts such as filling in the blanks or signing a customer's signature without both the customer's and the firm's prior approval. Still, the practices continue. Oh well, at least it gives me something to write about.
As to the other aspect of this case, running the product through another agent-of-record when, to all contraindications, the transaction seems to be handled by you -- c'mon, most industry veterans and regulators will figure this one out. It's not that clever. It's not a brilliant, new idea. Frankly, it's a tired bit of legerdemain that most of us recognize for a quick shuffle.