Customer alleges advisor misrepresented the income benefit on a variable annuity.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC Admin Release 34-81847/IA Release 4790/October 11, 2017: The Securities and Exchange Commission (Commission) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 (Exchange Act) and Section 203(f) of the Investment Advisers Act of 1940 (Advisers Act) against Danny S. Hood. On October 3, 2017, a final judgment was entered by consent against Hood, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 (Securities Act) and Rule 17a-4(b)(4) thereunder and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Keystone Capital Partners, Inc., et al., Civil Action Number 1:17-CV-02873, in the United States District Court for the Northern District of Georgia.

Order

Bar (Permanent)

any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent or NRSRO

Indefinite

10/11/2017

Participating in any offering of a penny stock

Indefinite

10/11/2017

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Between approximately March 2012 and November 2014, (the "Relevant Period"), Danny Hood and three others, each of whom were registered representatives of a broker dealer (collectively, the "Representatives"), fraudulently induced federal employees to rollover significant funds from their federal retirement accounts, referred to as Thrift Savings Plan ("TSP") accounts, into variable annuity products promoted under the banner of an entity called Keystone Capital Partners, Inc. d/b/a Federal Employee Benefits Counselors. Motivated by the prospect of high commissions associated with the variable annuities, the Representatives targeted federal employees, age 59 1/2 and over, who had significant TSP account holdings that could be rolled over on a tax-free basis into variable annuities held in qualified plans at annuity carriers. Defendants employed several tactics calculated to mislead federal employees into believing that Defendants and their recommended investment (that is, a variable annuity) were affiliated with or approved by the federal government. For example, despite the fact that their recommended investments had no connection to the TSP, the Representatives, in recommending this investment: (a) made misleading comparisons between their recommended investment and the life annuity offered through the TSP by omitting key information or falsely describing the actual fee structure and surrender fees related to their recommended investment; (b) used an eagle-encircled insignia on other documents given to customers and on their website that resembled the official seal of various agencies of the federal government; and (c) used a name, Federal Employee Benefits Counselors, that insinuated that they were affiliated with the federal government while obscuring the fact that they were associated with a broker dealer. During the Relevant Period, Defendants sold approximately 200 variable annuities with a total face value of over approximately $40 million to federal employees, who used monies rolled over from their TSP accounts to fund their purchases, and the Representatives collectively earned approximately $1.7 million in commissions on these sales. Further obscuring that Defendants and their recommended investments were unaffiliated with the TSP and the federal government, some of the Defendants also opened accounts with their broker dealer in these five investors' names without the investors' knowledge or consent. The broker dealer that employed the Representatives required that an account be opened in an investor's name before the Representatives could place a variable annuity order on the investor's behalf. But some of the investors did not learn of the creation or existence of these accounts in their names until after their TSP accounts had been liquidated (that is, the underlying securities were sold) and the funds transferred to purchase the variable annuity. Defendants also did not give these five investors the prospectuses for those investments, even though this was required by the broker dealer that employed the Representatives. This also veiled the fact that the investment option they recommended to these investors was a variable annuity issued by a private insurance company that had no connection to, and had not been specifically approved or vetted by, the TSP or the federal government.

Judgment Rendered

Injunction

CUSTOMER STATES REPRESENTATIVE MISREPRESENTED VARIABLE ANNUITY

$8,500.00

THIS IS THE CORRECTION TO THE ORIGINAL FILING 06/15/2015 REPORTED INCORRECTLY AS A SETTLEMENT. THIS IS NOT A NEW FILING.

CUSTOMER ALLEGES UNSUITABLE VARIABLE ANNUITY.

VARIABLE ANNUITY CARRIER GRANTED REQUEST FOR FREE SURRENDER AND CLIENT RETURNED TO THRIFT SAVINGS PLAN AS PER HER REQUEST.