Barred but Not Out
Welcome to a special edition of FundFire's weekly News Brief.
You might think getting kicked out of the securities industry would be the last chapter of a broker's story as it relates to them advising clients on financial matters. But an investigation by reporters at Ignites/FundFire sister publications Life Annuity Specialist, P&C Specialist and Financial Advisor IQ shows that's just not the case.
The team of journalists uncovered close to 350 examples of brokers barred by the Financial Industry Regulatory Authority who still have licenses to sell insurance in states across the country. Some on the list, found by analyzing records of more than 2 million insurance agents, also continue to hold themselves out as trusted financial planners or wealth advisors.
The list included several convicted of stealing from advisory clients – one of them still in federal prison – others who convinced investors to put money in Ponzi schemes and dozens who Finra barred based on their behavior related to selling insurance products. Collectively, their actions resulted in at least $87 million being awarded to investors or regulators, the investigation found.
"Let's be clear – you've got to be real bad to get barred by Finra," said attorney Joseph Peiffer, who represents investors in claims against brokers and is president of the Public Investors Advocate Bar Association. "These are not people who should be out there selling insurance or any financial product to anyone."
Another story in the series highlights the vast differences in how state insurance regulators respond to licensed agents being ejected from the securities industry – if they respond at all.
The fallout is already happening. After the initial article was published, Maine insurance regulators canceled the insurance license of Gerald Eaton, a former broker serving 8 1/2 years in federal prison for stealing $3.8 million from clients. Maine also terminated the license of a second barred broker, who was released from federal prison in 2023, after the publications provided officials with details about him.
Read all the articles and the methodology behind the investigation through the links below.
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