SEC Files Case Against Broker Dealers Targeting Federal Employees
Broker Dealers Targeting Federal Employees Facing Lawsuit
The U.S. Securities and Exchange Commission (SEC) has sued four former broker-dealers in Georgia federal court for deceiving hundreds of federal employees and pocketing the money.
The SEC claim alleges that the broker-dealers from an entity called Federal Employee Benefits Counselors pocketed $1.7 million by convincing federal employees into shifting their Thrift Savings Plan (TSP) retirement accounts into higher-fee, variable annuity products.
Posing as affiliates of the U.S. government, the brokers targeted federal employees nearing retirement with sizable funds invested in the TSP. The brokers suggested moving funds to variable annuity products, leaving out information about associated fees and promising that there would be guaranteed investment returns.
According to the SEC’s complaint, the brokers obscured information that the investment was actually a privately issued variable annuity with no connection to the TSP. To ensure that this fact was hidden, brokers sent investors documents with incomplete information or modified transactions.
In total, the brokers sold approximately 200 variable annuities to federal employees with a total face value of approximately $40 million. The brokers collectively earned approximately $1.7 million in commissions.
SEC Seeks Disgorgement Penalty
The complaint names brokers Christopher S. Laws, Jonathan D. Cooke, Danny S. Hood, and Brandon P. Long, as well as the Federal Employee Benefits Counselors. In the filing, the SEC seeks disgorgement of ill-gotten gains plus interest and penalties and permanent injunctions.
The action comes at a time when the SEC has focused enforcement on broker-dealers and actions of elder fraud.
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If you are looking for an investment fraud attorney to review your rights and options, the securities lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerages firms for their wrongful actions.