State Farm Stockbroker, His Relative, a Faked Insurance Policy, Travel Perks, Job Loss, and FINRA

October 17, 2018

Sometimes the majesty and detail of a scam or fraud is really, really impressive. Most of the time, however, it's all a dumbass variation on a theme that I've seen tried and failed over my decades on Wall Street. Gets to the point where my reaction is likely: "Oh, that again?" In any event, in today's Blog, we got some poor shlub selling both insurance and stocks. Apparently, he wants some travel perk but needs to close on one more insurance policy. Frankly, the whole effort comes off as somewhat lame and not thought through. Alas, it don't end well but, perhaps, this career crash will deter others. Look for a deal on Travelocity or Expedia. Use a credit card with extra travel points. Whatever you do, however  don't fake a signature on an insurance policy, okay?

Case In Point

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, Steven John Sosnowski, submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Steven John Sosnowski, Respondent (AWC 2018057468601, October 11, 2018).

Sosnowski was first registered in 1998 with FINRA member firm State Farm VP Management Corp. The AWC asserts that "Sosnowski has no prior disciplinary history."

Getting Life For T&E

The AWC alleges that "in order to qualify for travel and other programs offered by the Firm's insurance affiliate," in December 2016, Sosnowski forged the signature of a customer, who was also a relative, in order to initiate a term life insurance policy without the relative's knowledge or authorization. In furtherance of this alleged scheme and without the customer's knowledge, Sosnowski made the initial payment for the policy himself and listed the customer's mother as the beneficiary. When the customer/relative learned of the unauthorized transaction upon receiving a bill for a premium payment, he complained to State Farm. 

According to the AWC, after being informed by the firm of the customer complaint, "Sosnowski cancelled the policy and informed the Firm that he had forged the customer's signature to open the policy." Thereafter, The AWC asserts that:

On February 14, 2018, State Farm filed a Uniform Termination Notice for Securities Industry Registration (Form U-5) terminating Sosnowski's association as a result of the conduct described  . . .


In accordance with the terms of the AWC FINRA imposed upon Sosnowski a $5,000 fine and a five-month suspension from association with any FINRA member in any capacity.

Bill Singer's Comment

Funny thing. The AWC says that State Farm U5'd Sosnowski "as a result of the conduct described" but if you visit his online BrokerCheck records as of October 17, 2018,  there's no such disclosure. I can think of some explanations: Sosnowski "voluntarily resigned," and his registration was "terminated" by State Farm. The problem with that explanation is it would seem more likely that he was "permitted to resign" if State Farm terminated him "as a result of the conduct described." Then again, the conduct at issue didn't occur at the FINRA member firm but at its insurance affilate, so, who knows how compliance played that nuance.

Beyond the nuts-and-bolts of Sosnowski's termination, what caught my eye about this AWC was the absurdity of the situation. I mean, c'mon, let's all be honest with each other. First off, I couldn't quite figure out why Sosnowski didn't simply speak with his customer/relative -- let's pretend that was a cousin -- and say:

Hey, cuz, do me a solid. I want to qualify for some year-end perks and need to write just one more insurance policy. What I'd like you to do is sign on the dotted line but, don't worry, I'll pay the initial premium. That way, I can show my employer another signed policy and qualify for some T&E. If you like the insurance policy, you can keep it with the initial premium paid by me as a gift;  but, you know, you're gonna have to pay the subsequent premiums afterwards. Otherwise, just call up the firm, tell 'em ya got buyer's remorse and cancel the policy.

The other thing that I couldn't quite get was the whole point of Sosnowski's scam. I mean, geez,, didn't he think it through? Didn't he think ahead?

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