Beginning in July of 2020 client liquidated mutual fund shares and utilized proceeds of such sales to fund a Jackson National variable annuity. Customer claims that he was told by representative that the sale of his mutual fund shares would not generate capital gains. Customer further alleges that he was told the annuity product was a fixed annuity, not a variable annuity. Customer claims that he was compelled to pay $13,135.00 as a result of the capital gains generated by his liquidation of mutual fund shares.

$13,135.00

Client was aware of tax consequences of the liquidation of his mutual funds because he asked that we liquidate them over a two year period to alleviate the tax burden. He also signed to that fact in the "Notice to Applicant" section for California Residents, age 65 or older, of the application which states, "you should understand that the sale or liquidation of any stock, bond, IRA, certificate of deposit, mutual fund, annuity, or other asset to fund the purchase of the product may have tax consequences, early withdrawal penalties, or other costs or penalties as a result of the sale or liquidation." He was also aware that the product was a variable annuity due to the fact that he called me at my new broker-dealer asking to meet to discuss allocation changes in his variable annuity portfolio due to the performance.

Customer purchased brokered certificate of deposit in June, 2018. On August 27, 2018, person claiming to be attorney-in-fact for client alleged that CD was unsuitable due to customer's investment objectives. Firm later verified claimant is attorney-in-fact by obtaining a copy of POA from the firm's affiliate bank.

$5,000.00