Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Christopher Reynolds (Reynolds), previously associated with Pruco Securities, Llc., has at least 2 disclosable events. These events include one customer complaint, one regulatory event, alleging that Reynolds recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on August 16, 2024.
Without admitting or denying the findings, Reynolds consented to the sanction and to the entry of findings that he caused his member firm to maintain inaccurate books and records by forging customer signatures. The findings stated that Reynolds, without having the customers’ permission to do so, electronically signed or hand signed customers’ names on hard copy documents for three customers on 11 account documents. These account documents included transfer of assets forms and 1035 exchange/rollover/transfer forms and were required books and records of the firm. For two of these customers, Reynolds signed the customers’ names on withdrawal forms without the customers’ permission or authorization for the withdrawal or surrender. The findings also stated that Reynolds willfully violated Rule 15/-1 of the Securities Exchange Act of 1934 (Regulation BI or Reg Bl) by recommending that customers make annuity withdrawals or surrenders and reinvest the proceeds in a registered index-linked annuity without having a reasonable basis to believe those transactions were in his customers’ best interests. As a result, Reynolds’ customers incurred penalties such as surrender charges, the imposition of new, lengthier surrender periods, and tax consequences. The tax consequences could have been avoided if Reynolds recommended 1035 exchanges, as opposed to recommending full withdrawals or surrenders and then moving the money into the new product. After discovering Reynolds’ misconduct, his firm either reversed or stopped the customers’ transactions or, when that was not possible, paid the customers restitution. Reynolds also did not conduct a comparative analysis of the advantages and disadvantages of the existing annuities and the new registered index-linked annuity or make a determination that the customers would benefit from the new products. Reynolds thus failed to consider whether the purchases were in the customers’ best interest in light of the disadvantages of giving up the prior annuity contracts. Overall, Reynolds’ recommendations caused the customers to incur over $32,000 in surrender fees, in addition to adverse tax consequences. The findings also included that Reynolds caused his firm to fail to retain emails and text messages as part of its books and records by using his personal email account and cell phone to exchange securities-related communications with firm customers. Reynolds did not forward his emails or text messages to the firm for review or retention.
