According to a recent FINRA disciplinary announcement, Thomas Paul Schober (CRD #1058291, Rumson, New Jersey) has submitted an AWC in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Schober consented to the sanction and to the entry of findings that he recommended unsuitable annuity exchanges in the accounts of two senior customers. The findings stated that the victims of Schober’s unsuitable recommendations maintained separate brokerage accounts with Schober at his member firm. One of the customers held power of attorney for the other, who suffers from dementia. Both customers were conservative investors with limited financial means who relied on the income from their investments. Schober effected the annuity exchanges in the customers’ accounts and designed these exchanges to benefit him at the customers’ expense. All of the annuities that Schober exchanged were still in the surrender period. Consequently, the customers paid total surrender charges of approximately $154,642 to sell their annuities. Additionally, the customers paid sales charges of approximately $69,000, of which Schober received approximately $65,000 in commissions, and incurred new surrender periods in connection with their annuity purchases. Further, the annuities that Schober exchanged offered comparable income benefits for the customers. Schober never disclosed the amount of the surrender charges they would incur to sell their annuities, Nor did he explain the sales charges associated with the purchase of the new annuities or that they would be subject to new surrender periods. Schober effected the annuity exchanges without having a reasonable basis to believe that such purchases and sales were suitable for the customers in view of the nature, frequency, and size of the transactions and costs to the customers, including the significant surrender charges associated with the trades. The annuity switches provided little or no new economic benefit to the customers while providing Schober with the new commissions. The findings also stated that Schober attempted to conceal the unsuitable annuity exchanges by providing false information concerning the source of funds on the annuity transaction documents he submitted to the firm and annuity companies.

For the full FINRA findings, see FINRA Case #2015044007001.

According to Schober’s FINRA BrokerCheck, he was registered with SII INVESTMENTS, INC. from 06/2007 – 01/2015 and LEGACY FINANCIAL from 08/1998 – 06/2007.

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