Lindeen reaches settlement with NEXT for allegations of unsuitable investment
Montana Commissioner of Securities and Insurance Monica J. Lindeen today announced a settlement with NEXT Financial Services, a broker-dealer firm located in Houston, Texas, and the company's salesperson from Casper, Wyoming, Gary Falber.† In early May 2010, Lindeen issued a Cease and Desist Order and Notice of Proposed Agency Action against NEXT Financial and Falber alleging multiple violations of the Montana Securities Act.†
The Settlement Agreement includes a $2,500 fine which will be deposited to the state's general fund, a $2,500 contribution to the Investor Protection Trust for the benefit of Montana investors, an offer to the customer to waive all surrender penalties charged to the Montana investor for liquidating the annuity early, and a requirement that Falber submit quarterly reports to the Commissioner of all annuity business he conducts within Montana.
The Commissioner's office alleged Falber violated the Securities Act by recommending to a Montana resident that she sell her securities portfolio to purchase an annuity without conducting a thorough suitability analysis.† Under the Montana Securities Act, securities salespeople are required to recommend suitable transactions to their clients.† The actions alleged the Montana investor, a cancer survivor, indicated on the new account information collected by Falber that she needed an income stream.† Falber allegedly told the Montana investor of a unique investment strategy that involved technical analyses and investing in and out of the market.† However, after the Montana investor provided more than $200,000 for the investment, including $45,000 from a savings account, Falber instead purchased a variable annuity, telling the Montana investor the investment program he described was no longer available.† NEXT Financial was alleged to have failed to provide reasonable supervision of Falber, allowing him to violate Montana law and failing to protect its customer.
"An investor should do three things before purchasing an annuity: call our office to check out the background of the salesperson, get a clear explanation of product in writing, and carefully read all the fine print." Lindeen encouraged. "If you feel you are not getting suitable recommendations from your broker, please call CSI with any questions.
The Commissioner of Securities and Insurance consumer hotline is 1-800-332-6148.