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FORMER MERRILL LYNCH REGISTERED REPRESENTATIVE ADAM SPENCER DEANE SUSPENDED AND FINED FOR UNLICENSED AND FRAUDULENT SALE OF VARIABLE ANNUITY

Mar. 01, 2013 2:25 PM ET
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Former Merrill Lynch registered representative Adam Spencer Deane has been fined $25,000.00 and suspended from association with any FINRA member in any capacity for three months. Mr. Deane consented to FINRA's findings that he recommended and executed a variable annuity replacement contract for a client in a state in which Deane was not licensed to sell insurance products and include false information in the firm's electronic books and records. Mr. Deane had prepared the variable annuity application in Florida and sent it to the client's residence in New York for her signature, which the client signed and sent back to Mr. Deane. Merrill Lynch determined that the annuity contract could not be honored because the variable annuity was not available to New York residents. These findings by FINRA ultimately led to the described sanctions against Mr. Deane.

An annuity is a form of insurance that offers a series of payments for a period of time. Variable annuities are typically higher in risk when compared to other types of annuities and depend on how the stock market is performing. Buyers have the option to allocate the cash invested into different types of assets such as mutual funds, indices, fixed income investments or bonds, and cash. A deferred variable annuity offers investors a way to accumulate savings and defer taxes until money is withdrawn. Variable annuities do not guarantee principal protection, so investors can lose money if markets deteriorate.

Broker-dealers must establish and implement a reasonable supervisory system to protect customers from unlicensed and fraudulent sales practices. If broker-dealers do not establish and/or implement a reasonable supervisory system, they may be liable to investors for damages. In the case of Mr. Deane and Merrill Lynch, Mr. Deane logged into Merrill Lynch's web-based system used by sales employees to complete transaction paperwork for annuity contract purchases showing that the client was resident of New York. After the system rejected the replacement transaction because the annuity could not be offered to New York residents and because Mr. Deane was not licensed in New York, Mr. Deane inputted Florida as the client's state of residence. Mr. Deane also used the system to falsely show that the client signed the annuity contract in Florida. Clearly, Merrill Lynch failed to properly supervise Mr. Deane during his plot to sell an annuity to a client in New York. Therefore, an investor who has suffered damages can bring forth claims to recover losses against Merrill Lynch for acts such as Mr. Deane's unlicensed and fraudulent sale.

Have you suffered losses in a variable annuity sold by a Merrill Lynch or any other brokerage firm? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.

The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

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