Former Cambridge Legacy Securities registered representative Andrew Martin Abern has been censured and fined $25,000.00 for recommending that a client purchase a variable universal life policy by refinancing his home and using a portion of the proceeds to fund the policy. Also, Mr. Abern consented to FINRA's findings that he provided some customers with variable annuity expense disclosure forms that contained inaccurate information - the forms understated the annual expenses that would be charged on the new annuities the clients were purchasing. These findings by FINRA ultimately led to the described censure and fine against Mr. Abern.
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 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. The universal component in the name refers to the flexibility the owner has in making premium payments. The premiums can vary from nothing in a given month up to maximums defined by the Internal Revenue Code for life insurance. 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 unsuitable and potentially risky transactions. 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. Abern and Cambridge Legacy Securities, Mr. Abern recommended an unsuitable and risky method for purchasing a variable universal life policy, which would expose the client to a high concentration of securities investments - the client purchased the variable universal life policy for $332,000.00 using $100,000.00 in mortgage proceeds. Clearly, Cambridge Legacy Securities failed to properly supervise Mr. Abern to prevent him from recommending such an unsuitable and risky transaction. Therefore, an investor who has suffered damages can bring forth claims to recover losses against Cambridge Legacy Securities for acts such as Mr. Abern's recommendation.
Have you suffered losses in a variable annuity sold by any Cambridge Legacy Securities representative? 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 firstname.lastname@example.org for answers to any of your questions about this blog post and/or any related matter.