Securities Lawyers Blog
According to BrokerCheck records financial advisor Anthony Ferrara (Ferrara), currently employed by Larson Financial Securities, LLC (Larson Financial), has been subject to four customer complaints. According to records kept by The Financial Industry Regulatory Authority (FINRA), in July 2017 a customer filed a complaint alleging that Larson Financial made unsuitable recommendations and material omissions in the sale of a variable universal life (VUL) policy that was purchased in 2013. The customer requested $40,000 in damages and is currently pending. Many of the complaints concerning Ferrara’s conduct include claims concerning the sales of VULs.
In January 2017 another customer filed a complaint alleging unsuitability of the product, misrepresentation, breach of fiduciary duty, deceptive business practices, general fraud and negligence. The customer alleged $350,000 in damages and the claim is currently pending.
VUL are complex insurance and investment products that investors must fully understand the risks and benefits of prior to investing. One feature of a VUL policy is that the owner can allocate a portion of his premium payments to a separate sub-account that can be used to grow in value through investments. Monthly charges for the life insurance policy, including a cost of insurance charge and administrative fees, are deducted from the policy’s cash value. The cash value of the policy may increase or decrease based on the performance of the sub-account investments. In addition, the VUL policy terminates, or lapses, if at any time the net cash surrender value is insufficient to pay the monthly cost deductions. Upon termination of the policy, the remaining cash value becomes worthless.