October 27, 2017
On August 3, 2017, FINRA filed a Complaint against former general securities representative Walter Marino for making unsuitable recommendations. FINRA Office of Hearing Officers have since reached a Settlement to resolve allegations in this Complaint.
The Complaint alleged that Marino made unsuitable recommendations to two clients to fully surrender an annuity without knowing the surrender fees that would be incurred by the clients and without a reasonable basis for recommending the transactions. FINRA claimed that Marino’s actions caused one elderly client to incur an $82,523.23 surrender charge, when her annual income from investments was $250,000. The Complaint also alleged that Marino instructed his other clients, a married couple with three children, to purchase an annuity totaling $148,980 in May 2009. By June 2014, the annuity had a value of approximately $246,000, including a profit of approximately $101,000. The same month, Marino allegedly instructed the couple to surrender their annuity, which caused them to incur a surrender fee totaling $245,990. FINRA Department of Enforcement alleged that Marino received approximately $60,000 in commissions for both purchases and received a portion of the annual advisory fees.
FINRA Office of Hearing Officers, in an Order Accepting Offer of Settlement (Settlement) dated October 6, 2017, claim that Marino violated FINRA Rules 211, 2330(b) and 2010 by recommending unsuitable annuity replacements that benefited him, but caused financial harm to his customers. Additionally, the Settlement states that Marino attempted to evade supervisory scrutiny associated with variable annuity replacements by lying to Legend Equities Corporation, the FINRA-member firm in which he was associated with in Bohemia, New York from July 2002 to August 2015. Specifically, Marino allegedly misrepresented the source of funds being used to purchase the new annuities and stated that the annuities being purchased were not replacing existing annuities. FINRA Office of Hearing Officers asserts that these statements were false, thus Marino violated FINRA Rules 4511 and 2010.
Finally, while associated with Lincoln Investment in Dix Hills, New York (October 2015 to October 2016), Marino allegedly made an unsuitable recommendation to a customer to surrender a variable annuity resulting in a surrender charge nearing $7,000. Based on the foregoing, Marino also violated FINRA Rules 2111 and 2010.
By signing the Settlement, Marino consented, without admitting or denying the allegations made against him by FINRA Department of Enforcement, to a one-year suspension from associating with any FINRA member in all capacities. Marino submitted a sworn financial statement demonstrating an inability to pay monetary sanctions; thus, FINRA did not impose monetary sanctions.