FINRA

Velten was named a respondent in a FINRA complaint alleging that he failed to respond in any way to FINRA's requests for information in connection with its investigation into an allegation that he churned and flipped his elderly customers' accounts at his member firm, encouraging them to surrender their annuities and sell mutual fund holdings away from the firm and use the proceeds to purchase bonus annuities.

Decision

Bar (Permanent)

All Capacities

Indefinite

8/16/2022

Default decision rendered July 19, 2022, wherein Velten is barred from associating with any FINRA member in all capacities. The sanction is based on the findings that Velten failed to produce information and documents requested by FINRA in connection with its investigation into an allegation that he had churned and flipped customer accounts by encouraging his elderly customers to surrender their annuities, sell their mutual funds, and invest the proceeds into bonus annuities. The findings stated that FINRA requested that Velten provide a written statement about whether he had improperly traded for elderly customers away from his member firm. The request also asked for detailed information about Velten's handling of customer accounts. Velten failed to respond to FINRA's initial request, as well as three subsequent requests. FINRA needed the information it requested from Velten to perform its regulatory function and fully investigate potential misconduct. FINRA investigated allegations that Velten had improperly traded for elderly customers away from his firm, causing his customers to incur significant, unnecessary surrender charges so that he could generate sales commissions. Velten's failure to respond to regulatory requests deprived FINRA of his information and documents and frustrated FINRA's ability to fulfill its regulatory responsibilities. The decision is final on August 16, 2022.

Unsuitable recommendations

$30,000.00

$14,900.00

Claimant's investment was suitable and overall their portfolio experienced appreciation. Mr. Velten agreed to settle this matter to avoid the expense and inconvenience of further proceedings and his agreement did not constitute the acknowledgement of any wrongdoing or liability.

UNSUITABILITY OF A JACKSON NATIONAL VARIABLE ANNUITY PURCHASED IN MARCH OF 2011.

$10,000.00

AS THE INVESTMENT REPRESENTATIVE FOR THE CLIENT, I WAS EXTREMELY CAREFUL TO ENSURE THE INVESTMENT WAS CONSISTENT WITH HER STATED INVESTMENT OBJECTIVES AND RISK TOLERANCE. I DENY CLIENT'S ASSERTIONS OF WRONGDOING. I, IN FACT, MADE FULL DISCLOSURE TO HER AS IS MY USUAL APPROACH WITH CLIENTS AND PROSPECTIVE CLIENTS, AND WAS PARTICULARLY FOCUSED ON ENSURING HER COMPLETE UNDERSTANDING BECAUSE OF HER PREVIOUS UNSUCCESSFUL INVESTMENT EXPERIENCE WITH ANOTHER REPRESENTATIVE. WE MET IN MY OFFICE ON 3 OCCASIONS FOR A TOTAL OF 5 HOURS PRIOR TO THE CLIENT INVESTING IN THE VARIABLE ANNUITY ADDRESSED IN HER LETTER OF COMPLAINT. WE MET AGAIN FOR APPROXIMATELY ONE HOUR WHEN THE ANNUITY CONTRACT WAS DELIVERED AT WHICH TIME WE CAREFULLY REVIEWED THE POLICY, RIDERS AND SUBACCOUNTS, AS WELL AS THE FLORIDA FREE LOOK PROVISION, AFTER WHICH POLICY WAS GIVEN TO THE CLIENT AND THE DELIVERY RECEIPT SIGNED. THE FREE LOOK OPTION WAS NOT EXERCISED BY THE CLIENT. CLIENT ALLEGES LACK OF SUITABILITY TEN MONTHS AFTER ISSUANCE OF HER ANNUITY, AND THIS WAS ONLY AFTER THE VALUE OF HER ANNUITY DECLINED DUE TO THE EUROPEAN DEBT CRISIS DURING THE SUMMER AND FALL OF 2011 AND ITS SUBSEQUENT EFFECT ON THE AMERICAN ECONOMY. ADDITIONALLY, THE CLIENT FAILS TO DISCLOSE IN HER COMPLAINT THAT HER VARIABLE ANNUITY EXPERIENCE INCLUDES THE OWNERSHIP OF TWO OTHER VARIABLE ANNUITIES IN WHICH SHE AND HER HUSBAND INVESTED THROUGH NATIONWIDE LIFE INSURANCE CO OVER FOUR YEARS AGO. THE CLIENT WAS FULLY INFORMED AND WILLINGLY INVESTED WITH FULL KNOWLEDGE OF ALL THE RELEVANT FACTS RELATED TO THE INVESTMENT.

WITH THE PROCEEDS OF A QUALIFIED ACCOUNT THE REPRESENTATIVE OPENED A NON-QUALIFIED ACCOUNT AT JACKSON NATIONAL IN 8/2010.

CLIENTS ALLEGE LOSS OF DEATH BENEFIT AND GUARANTEED INCOME BENEFIT AS A RESULT OF VARIABLE ANNUITY EXCHANGES.

$335,000.00

$65,000.00

THE CLIENTS HAVE MISREPRESENTED THE FACTS. THEY INSISTED ON EXECUTING AN ANNUITY EXCHANGE BECAUSE THEY NO LONGER WANTED TO PAY THE HIGH COST ASSOCIATED WITH A GUARANTEED INCOME RIDER THAT THEY WOULD NEVER UTILIZE AND ASSURED ME THE SMALL LOSS OF DEATH BENEFIT WAS NOT AN ISSUE. I VISITED THE CLIENTS IN THEIR HOME ON THREE OCCASIONS IN JULY 2011 TO ENSURE FULL DISCLOSURE WAS MADE AND THEY HAD A CLEAR UNDERSTANDING OF ALL THE DISCLOSURE FORMS THEY HAD SIGNED. ON THE SECOND VISIT, I PROVIDED THEM WITH COPIES OF THE NUMEROUS DOCUMENTS THEY HAD SIGNED. ON ALL THREE OCCASIONS, THEY NOT ONLY INDICATED THEY DID HAVE A CLEAR UNDERSTANDING OF THE TRANSACTIONS, BUT THAT THEY WERE PLEASED THEY MADE A CHANGE. I ALSO HAD ONE APPOINTMENT WITH THE CLIENTS IN MY OFFICE AND TWO SCHEDULED TELEPHONE APPOINTMENTS AND THE CLIENTS NEVER EXPRESSED ANY RESERVATIONS OR DISSATISFACTION WITH THEIR INVESTMENT DECISION. ON THE THIRD TELEPHONE APPOINTMENT ON SEPTEMBER 26, 2011, [CUSTOMER] INFORMED ME THEY WERE CHANGING THE BROKER DEALER OF THEIR ANNUITY TO THEIR OLD FINANCIAL REPRESENTATIVE WITH NO EXPLANATION. I WAS ONLY THE BROKER OF RECORD ON THEIR VARIABLE ANNUITIES A LITTLE OVER TWO MONTHS. IT IS IMPORTANT TO NOTE THAT THE CLIENT HAVE HAD THE ABILITY TO ADD A GUARANTEED INCOME RIDER TO THE VARIABLE ANNUITIES I 1035 EXCHANGED THEM INTO. INTERESTINGLY, AFTER 2 YEARS AND 10 MONTHS, THEY HAVE BOTH FAILED TO ELECT THE GUARANTEED INCOME RIDER FOR THEIR NEW VARIABLE ANNUITIES. I WOULD LIKE TO POINT OUT THAT THE LOSS OF THE GUARANTEED INCOME RIDER WAS THE PRIMARY BASIS OF THEIR COMPLAINT.

UNSUITABILITY. REQUESTED RECISION AFTER FREE LOOK PERIOD EXPIRED.

ALTHOUGH THE RECOMMENDATION WAS DEEMED CONSISTENT WITH THE CUSTOMER'S STATED INVESTMENT OBJECTIVES AND GREAT CARE WAS TAKEN BY THE REPRESENTATIVE TO DETERMINE SUITABILITY AND PROVIDE AN APPROPRIATE SOLUTION TO MEET THOSE OBJECTIVES, SUMMIT AND THE REPRESENTATIVE WORKED WITH THE INSURANCE COMPANY IN THE INTEREST OF CUSTOMER SERVICE TO RESCIND THE TRANSACTION WITH NO LOSS TO THE CLIENT OR COST TO THE REPRESENTATIVE. HAD THE CURRENT OUTCOME BEEN KNOWN AT THE TIME, THE FILING OF THIS DISCLOSURE WOULD NOT HAVE BEEN MADE.

ALLEGES UNSUITABLE ADN ILL-ADVISED INVESTMENTS. DAMAGES ARE NOT SPECIFIED BUT ARE BELIEVED TO BE IN EXCESS OF $5,000. ACTIVITY TOOK PLACE 1998.

FOR APPROXIMATELY 3 1/2 YEARS TO THE DATE OF THIS COMPLAINT, I HAD ABSOLUTELY NO CONTROL OR VISIBILITY OF THE MR. AND MRS. STRICKLAND BROKERAGE ACCOUNT. WHEN MR. AND MRS. STRICKLAND INITIALLY INVESTED IN THE MUTUAL FUNDS AND VARIABLE ANNUITIES MENTIONED IN THEIR COMPLAINT, I MADE FULL DISCLOSURE AND PROVIDED A PROSPECTUS FOR EACH MUTUAL FUND AND VARIABLE ANNUITY. THE MUTUAL FUNDS AND VARIABLE ANNUITIES WERE SUITABLE INVESTMENTS FOR THE STRICKLAND INVESTMENT OBJECTIVES, INVESTMENT TIME-FRAME AND RISK TOLERANCE. THE STRICKLAND'S FAILED TO MENTION THAT THEIR SON, BERT STRICKLAND WAS THEIR BROKER AT A.G. EDWARDS, FOR A PERIOD OF 18 MONTHS.

ALLEGES UNSITABLE INVESTMENTS. DAMAGES ARE NOT SPECIFIED BUT APPEAR TO BE IN EXCESS OF $5000.00

$24,000.00

ALL OF THE INVESTMENT ADVICE PROVIDED TO THE CLIENT AND THE INVESTMENTS WHICH WERE ULTIMATELY MADE, WERE CONSISTENT WITH THE INVESTMENT OBJECTIVE AND SUITABLE. I DENY ANY WRONGFUL CONDUCT IN CONNECTION WITH THE CLIENT'S ACCOUNT. THE COMPLAINT MADE BY CLIENT WAS SOLICITED BY THE A.G. EDWARDS & SONS BRANCH OFFICE MANAGER AFTER I HAD DEPARTED THE FIRM AND WENT INDEPENDENT. I WAS NOT AWARE OF THE COMPLAINT UNTIL AFTER THE SETTLEMENT WAS PAID. I DID NOT CONTRIBUTE FINANCIALLY TO THE SETTLEMENT A.G EDWARDS MADE TO THE CLIENT. IT IS INTERESTING TO NOTE, THIS U-4 ENTRY WAS MADE SHORTLY AFTER I FILED FOR ARBITRATION AGAINST A.G. EDWARDS & SONS.

CLIENT ALLEGED UNSUITABLE INVESTMENTS AND OMISSION OF MATERIAL FACTS. *** CLIENTS PRIMARY ACCOUNT OBJECTIVE WAS AGGRESSIVE INCOME. PRIOR TO SALE OF THE MUTUAL FUND, I REVIEWED THE FUND INVESTMENT OBJECTIVE AND ASSOCIATED INVESTMENT RISKS WITH THE CLIENT USING THE FUND PROSPECTUS IN MY OFFICE. CLIENT INSTRUCTED ME TO LIQUIDATED AGAINST MY ADVICE. DURING A NINETEEN MONTH PERIOD, I MET WITH THE CLIENT ON THREE OCCASIONS AT MY OFFICE. I HAD AT LEAST TWELVE TELEPHONE CONVERSATIONS WITH THE CLIENT DURING THE SAME NINETEEN MONTH PERIOD AFTER EACH CLIENT CONTACT,MRS. MUDGE THANKED ME FOR MY EFFORTS AND ADVICE AND ASSURED ME SHE WOULD HOLD ON TO THE MUTUAL FUND.

$12,035.17

A.G. EDWARDS & SONS, INC. RESPONDED TO THIS CLIENT AND CONSIDERS THIS MATTER CLOSED.

CLIENTS ALLEGED MISREPRESENTATION; UNSUITABLE RECOMMENDATIONS AND LOSSES OF OVER $5,000. **** THE CUSTOMERS DID NOT HAVE A CAPITAL LOSS ON THEIR INVESTMENTS. NO POSITITIONS IN EITHER OF CUSTOMER'S IRAS WERE LIQUIDATED. BOTH IRAS WERE TRANSFERRED IN KIND TO UBS/PAINE WEBBER ON JUNE 27, 2001. CUSTOMERS BOTH SIGNED IRA CARDS ON FEBRUARY 17, 2000, THAT CLEARLY STATED THEIR PRIMARY INVESTMENT OBJECTIVE AS AGGRESSIVE GROWTH. CUSTOMERS AND I COLLECTIVELY DECIDED AGGRESSIVE GROWTH WAS THEIR PRIMARY INVESTMENT OBJECTIVE AFTER TWO, TWO-HOUR MEETINGS IN MY OFFICE. A.G. EDWARDS' IRA STATEMENTS WERE ISSUED ON A QUARTERLY BASIS AND REFLECTED THE PRIMARY INVESTMENT OBJECTIVE OF AGGRESSIVE GROWTH. ADDITIONALLY, CUSTOMER (MR.) WOULD FREQUENTLY GO ON-LINE USING AGECONNECT TO REVIEW HIS AND CUSTOMER (MRS.) IRAS. AGECONNECT PROMINENTLY DISPLAYED THE PRIMARY INVESTMENT OBJECTIVE FOR BOTH IRAS AS AGGRESSIVE GROWTH.

A.G. EDWARDS & SONS, INC. RESPONDED TO CLIENT ON 7/30/01 AND CONSIDERS THIS MATTER CLOSED.