Plans Recommended Using Funds Obtained From Mortgage Refinancings and Home Equity Loans
FINRA Also Suspends Broker for Nine Months, Fines Her $60,000
The Financial Industry Regulatory Authority (FINRA) recently announced that it has fined Ameritas Investment Corp., of Lincoln, NE, $100,000 and has suspended and fined one of its brokers for inducing customers to take on additional mortgage and/or home equity debt in order to purchase variable universal life insurance policies (VULs). Those policies were pitched to customers as mechanisms for funding college expenses and retirement.
Ameritas was sanctioned for failing to adequately supervise broker Nancy Ziering, who was based in New Jersey, and for advertising violations related to her financial plans. FINRA found that the financial plans she created were misleading and that her recommendations to customers to purchase variable universal life insurance policies were unsuitable. Ziering was fined $60,000 and suspended for nine months.
FINRA found that Ziering used misleading financial plans with more than 220 customers whom she recruited through her separate college-planning business, Madison Financial Aid Consultants, between October 2003 and December 2005. Through Madison Financial Aid Consultants, she gave seminars on college planning at schools and other locations for parents with children approaching college age. Following her presentations, she would offer to meet with parents to discuss funding for college and other financial matters.
According to FINRA, the financial plans prepared by Ziering were extremely complicated and confusing and, to be successful, required customers to adhere strictly to all aspects of a detailed plan for 20 years. Although the plans were marketed as a way to demonstrate how customers could save for college and retirement, in nearly every instance they recommended that the customer purchase a variable universal life insurance policy issued by an affiliate of Ameritas, using money obtained from a mortgage refinancing or home equity loan. Over 90 of the customers who received the financial plans purchased one or more variable universal life insurance policies from Ameritas.
FINRA found that Ameritas became aware of Ziering’s use of the misleading plans, but failed to take sufficient action to ensure that she did not continue to use the plans. FINRA found that Ameritas also failed to adequately supervise Ziering’s recommendations to use proceeds from mortgage refinancings or home equity loans to purchase variable universal life insurance policies.
FINRA found that Ziering’s recommendations to six customers to purchase variable life insurance policies were unsuitable. For instance, one customer had provided Ziering with information showing that she and her husband were spending more on expenses than they received in income, including nearly $80,000 in credit card and other debt, in addition to first and second home mortgages, car loans and anticipated college expenses for a child about to enter college. However, Ziering recommended that the customer purchase a variable universal life insurance policy and take on the additional burden of funding the policy with large annual premium payments. In another instance, where a customer had significant assets to pay for college and also owned life insurance policies, Ziering nonetheless recommended the same plan for that customer, including the refinancing of a home mortgage and the purchase of a variable universal life insurance policy.
Prior to FINRA’s action, Ameritas rescinded the variable universal life insurance policies purchased by the six customers who received unsuitable recommendations and refunded their premium payments.
In settling these matters, Ameritas and Ziering neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
If you have questions about investments you made with Ziering or Ameritas, or investments you made in a variable universal life insurance policy, or if you believe that you have been the victim of a securities fraud, The White Law Group may be able to help. To speak to a securities attorney, please call our Chicago office at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
To Learn more about The White Law Group, visit https://whitesecuritieslaw.com.Tags: Ameritas, broker fraud, FINRA, investment losses, investor protection, Nancy Ziering, NASD, New Jersey, SEC, securities arbitration, Securities Attorney, Securities Lawyer, Variable Universal Life Insurance Policy Last modified: November 29, 2022