Former LPL Broker Who Helped Customers Evade Fees Suspended
An Illinois advisor who helped four customers avoid $10,000 in fees for surrendering variable annuities by lying about their employment statuses agreed to a $10,000 fine and a two-year suspension from working as a registered rep, according to the Financial Industry Regulatory Authority.
The unnamed firm holding the retirement contracts waived surrender fees for customers who remained with their employer for five years from issuance of the variable annuities contracts, among other conditions, according to the settlement document. The customers all worked at the same business, it said.
Finra did not name Velasco’s former firm, but his BrokerCheck history says he was affiliated with MetLife Securities for more than 11 years before transferring his registration to LPL in June 2016.
LPL discharged Velasco in June 2019 for allegedly submitting the inaccurate retirement plan documents, according to BrokerCheck. He faked the letters to facilitate transfer of the four accounts to LPL, according to Finra.
In addition to falsely stating that the customers had left their employment, Velasco lied to Finra in December 2020 when it investigated his own termination. “At the conclusion of his on-the-record testimony that same day, however, Velasco corrected his prior testimony and admitted that he falsified the termination letters to help his customers avoid paying surrender fees,” the consent letter said.
Velasco’s falsification of the letters and his false testimony each violated Finra Rule 2010, which requires brokers to observe high standards of commercial honor and just and equitable principles of trade, the letter said. He also violated the industry self-regulator’s Rule 8210 requiring truthful and accurate testimony.
Velasco, who since October 2019 has been an investment adviser in Lisle, IL, with Kovack Advisors, Inc., signed the acceptance, waiver and consent letter without admitting or denying the findings.
As is standard, the Finra fine is not due until he re-associates as a broker with a Finra member firm or requests relief from any statutory disqualification, the letter said.