Former Michigan Registered Representative Consents to FINRA Sanctions to Resolve Allegations of Unsuitable Recommendations Involving Class A Mutual FundsFriday, November 22, 2019
On November 11, 2019, the Financial Industry Regulatory Authority (FINRA) Department of Enforcement approved a Letter of Acceptance, Waiver and Consent (AWC) to resolve violations of FINRA Rules 8210 and 2010 against Timothy Millis, a registered representative formerly associated with NYLIFE Securities, LLC in Okemos, Michigan.
According to his FINRA BrokerCheck report, Millis was associated with NYLIFE Securities from January 2002 to April 2019 when he was “permitted to resign after a review of his business identified a pattern of unsuitable mutual fund switches.” Millis has not been associated with a FINRA member firm since his resignation from NYLIFE Securities.
FINRA Department of Enforcement alleges in the AWC that between January 2015 and December 2018 Millis recommended 66 unsuitable short-term Class A mutual fund transactions to ten customers. Due to significant upfront costs associated with the purchase of Class A mutual funds, they are meant to be held long-term. For many of the transactions that FINRA alleged were unsuitable, Millis recommended sale of the funds after holding them for less than one year. The customers were charged approximately $174,725 in upfront sales charges and five of the customers realized losses totaling approximately $33,391.
Millis also allegedly made an unsuitable recommendation to one customer to liquidate a variable annuity to purchase Class A mutual fund shares. Liquidation of the variable annuity resulted in the customer owing a $14,866 surrender charge. Then, when Millis recommended he purchase the Class A mutual funds, the customer paid another $15,340 in upfront sales charges. FINRA asserts that Millis did not have a reasonable basis to believe these transactions were suitable for the customer, considering the customer was elderly with significant expenses and short-term liquidity needs.
Based on the foregoing, Millis violated FINRA Rules 2111 and 2010. Without admitting or denying the allegations made against him, Millis consented to a three-month suspension from associating with any FINRA member firm in any capacity and to disgorge $7,500, plus interest.
Millis’ FINRA BrokerCheck report further reveals that a customer dispute was settled on April 4, 2019 for $50,279.06. Allegations included unsuitable recommendations in which the customer incurred front-end sales charges when funds from a variable annuity withdrawal were subsequently transferred to the customer’s brokerage account as well as a surrender charge.
If a broker was not properly supervised while registered at a brokerage firm, the firm can be held liable for the broker’s misconduct. Did your broker’s unsuitable recommendations cost you money? If so, you may be able to recover from him or her or his or her brokerage firm. Since 1998, the attorneys at ChapmanAlbin have been representing victims of investment fraud and broker misconduct. Call us today at 1-877-410-8172 for a free, no obligation consultation.