SEC Prevails in LPL Rep Annuity Fraud Case
What You Need to Know
The rep persuaded federal employees to roll over funds from their retirement accounts to fund the purchase of higher-fee variable annuities.
The rep falsely portrayed himself and his company as counselors hired by the federal government to educate federal employees, the complaint states.
After a nine-day trial, a jury on Monday in the Northern District of Georgia ruled in favor of the Securities and Exchange Commission against a former registered representative of LPL Financial LLC and Keystone Capital Partners, a firm he co-founded.
Gurbir Grewal, director of the SEC Division of Enforcement, said in a statement that the SEC is pleased with the jury’s verdict holding former registered rep Jonathan Dax Cooke and Keystone Capital Partners Inc., known as Federal Employee Benefit Counselors, “liable for fraudulently selling variable annuities to hundreds of federal employees who were at or near retirement age by falsely portraying himself and his company as counselors hired by the federal government to educate federal employees about their retirement benefits.”
Grewal stated that Cooke persuaded the federal employees “to roll over funds from their retirement accounts to fund the purchase of higher-fee variable annuity products.”
The verdict, Grewal continued, “underscores our continuing efforts to protect investors, particularly those who are approaching retirement.”
LPL did not respond to a request for comment by press time.
In July 2017, the SEC charged four former Atlanta-area brokers, including Cooke, with fraudulently inducing federal employees to roll over holdings from their federal Thrift Savings Plan (TSP) retirement accounts into higher-fee, variable annuity products.
The SEC’s enforcement action came at a time when the agency had been focusing more specifically on brokers’ and advisors’ interactions with older investors, and others investing for retirement, through the ReTIRE initiative of the agency’s national exam program and the work of the Broker-Dealer Task Force in its Enforcement Division.
