Ethics Center: Business Ethics

Rogue Advisors on Parade: Dead Son Fraudster, Client Moocher, Annuity Churner

  • A New York insurance agent and his wife were indicted for trying to scam their deceased son’s life insurer. According to New York Attorney General Eric T. Schneiderman, the agent, Lawrence D. Rosenbaum, 65, and his wife, Thomasine Henderson, 65, both of Albany, New York, stole over $12,000 in life insurance cash values  and tried to wrongfully obtain nearly $50,000 in life insurance benefits relating to the death of their son. After he intentionally stepped in front of a truck on I-87, the father called the insurer to see if it would pay a benefit in the event his son died in an accident. After the insurer said yes, he and his wife filed a death claim concealing the fact that their son killed himself.

  • A Newport Beach, California stockbroker has been fined $5,000 and suspended from the business for borrowing $52,000 from a client. According to FINRA, M. Tyler Bonds, a stockbroker formerly registered with LPL Financial LLC, was sanctioned after it became known he entered into a loan arrangement with a customer in violation of LPL’s policies. The broker also hid the existence of the loan from his broker-dealer in violation of FINRA Rule 2010.

  • A Baton Rouge, Louisiana securities broker churned multiple client annuities in order to score commissions of $25,460. According to FINRA, James K. Cox, a CFP advisor with more than 23 years experience, recommended to his 59-year-old client to exchange her existing variable annuity for a new one. He also advised her to sell another variable product to generate money to buy two fixed equity-indexed annuities and to liquidate three more variable annuities. None of his recommendations were consistent with the client’s desire for products with a strong income-stream growth potential. Plus, they exposed the client to new surrender charges in the event she cashed in her policies within seven years. For punishment, the broker agreed to disgorge his commissions, pay a $10,000 FINRA fine, and accept a four-month suspension from the brokerage industry.

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