The National Association of Securities Dealers has filed a complaint against John Steven Blount, a registered representative who used to sell variable annuities and mutual funds for NY Life Securities.
The complaint states that, in the case of 11 variable annuity customers, Blount recommended unsuitable sales totaling $6 million, reaping nearly $220,000 in commissions. Blounts customers were older conservative investors whose risk tolerance did not dictate the sale of a variable annuity or allocation into riskier sub-accounts. Blount also misled customers about the nature of the variable annuity products they were purchasing, neglecting to mention penalties for early withdrawals and asserting that their investments would be "backed by a AAA company."
In addition, the NASD discovered that in 25 cases involving both variable annuities and mutual funds, Blount falsified a sales suitability document that summarized clients risk tolerance and other important financial information in order to get around the companys compliance system.
This investigation is part of the "sweep" of variable annuity products that the NASD has been conducting since 2001. "Our continuing examination focus on variable annuity sales and todays enforcement action should leave no doubt about our continuing serious concerns over how these products are sold," said Mary L. Schapiro, vice chairman and president of regulatory policy and oversight at the NASD.