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Recent Cases: Widow recovers $300,000 from Respondents. |
In 2002, the Client’s husband was killed in a car accident and she received approximately $3.3 million in life insurance and settlement proceeds. At that time, the Client was 50 years old with a 12 year old son. She was not employed outside the home and therefore needed income from her investments to pay her living expenses and support her son. This could have been accomplished with any number of low-cost, fixed-income investments which would have generated the income the Client needed while protecting her principal. Instead, Respondents invested virtually all of the Client’s assets in the highest-commissioned, most sophisticated products available -- variable universal life insurance policies, variable annuities, real estate limited partnerships, REITS, and oil and gas limited partnerships. These equity investments and insurance products were unsuitable for the Client in light of her investment objectives. Indeed, most of these investments were far too complex for the Client to understand, and most were also far too risky. Furthermore, none of these were income-producing investments, which was her primary investment objective. In addition, these investments had excessive fees, and most had substantial surrender penalties as well, thereby tying up the vast majority of her assets so that she would not have access to her money for an extended period of time. Even worse, after locking up most of the Client’s assets in illiquid investments, Respondents then began borrowing against the annuities and making 72T withdrawals from her IRA in order to generate the income that the Client needed. Thus, Respondents took gross advantage of the Client, a widow with no investment experience, while she was still in a state of shock and grief over the loss of her husband, to generate huge commissions for themselves. In arbitration through FINRA, the Firm recovered all of the Client’s net loss. The case was handled by Ed Dovin and Allison Ficken. |
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