Finra last Wednesday fined and suspended a former LPL Financial rep who allegedly forged two customers’ signatures for fixed annuity contracts.
The former rep, Joffre Salazar, was associated with LPL from 2016 to 2019, when he voluntarily resigned, according to the Financial Industry Regulatory Authority Inc. After that time, LPL launched an internal review about his alleged “involvement in processing [an] annuity application without customer authorization,” the records state. After leaving LPL, Salazar was registered in 2019 with American Portfolios Financial Services, though he was terminated that same year in connection with “inconsistencies in client documents.”
He is no longer registered with a Finra member, according to the industry regulator.
The alleged forgeries happened in 2017 and 2018 when he was associated with LPL.
In the 2017 instance, the rep had recommended a five-year fixed annuity, and the client agreed to the purchase. However, the annuity issuer in 2018 did not accept the application and asked Salazar to submit new documentation.
“Instead of having Customer A sign new documents, Salazar forged Customer A’s signature six times on multiple documents for the purchase of a seven-year fixed annuity, even though Customer A had not authorized the purchase of a seven-year annuity,” Finra wrote. “Salazar then submitted the forged documents for processing, and the application was approved.”
Separately, another customer agreed in 2018 to purchase a five-year fixed annuity with an interest rate of 3.15%. That product had an actual interest rate of 2.85%, and the rep allegedly forged client initials in order to process the application, according to Finra.
Both customers complained to LPL about the incidents, Finra stated.
Salazar did not admit to or deny the regulatory agency’s findings, though he agreed to a $5,000 fine and one-year suspension as part of the letter of acceptance.
In January, the New York State Department of Financial Services disclosed that Salazar agreed to a $3,500 fine in connection with “soliciting to an insured an unauthorized insurer’s annuity, and by allowing the same insured to sign the unauthorized insurer’s application and related documents.”
This month, Finra announced two other recent actions against reps related to annuities.
In one case, Thomas Cleary was associated with UBS Group and RBC Capital Markets between 2017 and 2019, when he was serving as executor of a customer’s estate — an outside business activity to which the firms were previously unaware, according to Finra records. Cleary allegedly violated UBS policy by failing to inform the firm that he was also a beneficiary of the client, entitled to assets worth more than $4 million.
“After the customer’s death, Cleary contacted insurance companies to de-link certain annuities, held by the customer outside of the firm, from her firm account statements, which meant that the firm was not informed when Cleary terminated the policies after inheriting them from the customer,” Finra stated.
Cleary did not admit or deny the findings in accepting the $10,000 fine and one-year suspension. He had previously been cited by Virginia’s securities division over the same issue, resulting in a fine of $35,000, according to Finra.
“Burton falsely stated that gaining a stepped-up death benefit was one of the reasons that the VA exchange was suitable for the customer,” Finra wrote. “In fact, as Burton knew, each VA that was to be replaced had a stepped-up death benefit that, unbeknownst to his firm, was removed at his recommendation immediately prior to the time he recommended the variable annuity exchange.”
That was done “in order to make his recommended exchanges look to his firm as though they were more advantageous to the customer than they were, even though each of the forms identified other, accurate reasons why each exchange was suitable for the customer.”
Burton is currently registered with Cetera Advisors, according to BrokerCheck. His Finra suspension is for three months and his acceptance of the letter includes a $5,000 fine. He did not admit or deny the findings in signing the letter.
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