Securities Lawyers Blog
Recently, Sandeep Varma’s (Varma) attorney reached out to our firm to inform us that our post on Varma was inaccurate. The post detailed that Varma had been subject to five customer and that the majority of these complaints involved the recommendation of unsuitable and misrepresented variable investments including CRTs and life insurance policies.
The post also detailed how in January 2018, FINRA found that Varma misrepresented a real-estate planning strategy involving Charitable Remainder Trusts (CRTs) to 70 potential customers by providing misleading claims about the nature of deferred capital gains taxes, risks, and rewards that are involved in CRTs. In addition, Varma recommended that the sale of appreciated assets should be invested into variable annuities and into premiums for an insurance policy. While recommending these investments, Varma failed to disclose that the premium payments for the life insurance policy were dependent on performance of investments in the CRT and that this yielded risk for lapse in the insurance policy. FINRA found that Varma’s positive projection of the performance of investments in the CRT and life insurance policy was exaggerated in a promissory manner because it didn’t disclose the reasonable possibility of negative investment performance. In February 2018, Varma was suspended for 10 days and fined $15,000. Without admitting or denying the findings, Varma consented to the sanctions and to the entry of findings.
Varma’s attorney has brought it to our attention that Varma has succeeded in using FINRA’s flawed expungement process system to remove two complaints from his BrokerCheck record that resulted in settlements totaling $1.2 million. As shown in Varma’s expungement “award”, Varma sued his own employer, LPL Financial LLC (LPL Financial) for damages of $1.00 due to the placement on his record of two customer complaints. The “hearing” that took place appears to have been perfunctory at best. The hearing concerning two customer complaints took only one hearing session to complete. Usually there are two hearing sessions a day – meaning in this case two cases were probably decided in time for the arbitrator to catch lunch. The total cost to Varma by FINRA to expunge two customer complaints from his record was $100 – excluding any fees he privately paid his counsel.
