National investment fraud lawyers KlaymanToskes continues its investigation of Fortune Financial Services after the Financial Industry Regulatory Authority (“FINRA”) sanctioned the firm, ordering it to pay over $600,000 in restitution to investors, due to findings that it failed to supervise representatives making unsuitable variable annuity investment recommendations.
Investors that suffered losses at Fortune Financial Services may be entitled to a financial recovery. Contact Lawrence L. Klayman, Esq. immediately at (888) 997-9956 or lklayman@klaymantoskes.com to discuss your legal options at no cost.
Fortune Financial Services, Inc. entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) with FINRA’s Department of Enforcement on February 10th, 2023. According to the AWC, the Monaca, Pennsylvania-based firm has been sanctioned in connection with allegations that its supervisory system for variable annuity exchanges was not reasonable. Fortune Financial has been ordered to pay restitution to investors in the total amount of $612,172.66, plus interest of $25,183.21.
In one example discussed by the AWC, a Fortune Financial representative caused 48 customers who purchased variable annuities and took short-term withdrawals to incur $612,172.66 in surrender charges. Fortune supervisors missed several red flags on documents submitted for review by the representative, including their failure to compare the information on the exchange applications with the original applications, the surrender fee schedules, or the customers’ most recent account statements. The firm allegedly failed to detect that the representative had omitted or understated the customers’ actual surrender charges on 136 exchange applications that were reviewed and approved.
Supervisors at the firm also allegedly failed to analyze whether the “purported cost savings of the new share class exceeded the amount of the surrender charges,” in order to reasonably determine whether the recommended exchanges were suitable.
According to the AWC, Fortune Financial Services violated FINRA Rules 2330, 3110 and 2010 by failing to establish, maintain, and enforce a supervisory system for variable annuity exchanges, among other issues.
FINRA Rule 2330 (Variable Annuities) requires a registered principal to review and determine whether to approve a customer’s application for a deferred variable annuity before sending the application to the issuing insurance company.
FINRA Rule 3110 (Supervision) requires that brokerage firms establish and maintain supervisory systems to detect and prevent violations of any securities rules and regulations. Written supervisory procedures (“WSPs”) must be established and enforced to supervise the activities of the firm’s registered financial professionals. When a supervisor or manager fails to reasonably supervise another representative under their leadership, that firm may become responsible for failure to supervise.
FINRA Rule 2010 requires brokerage firms and their registered representatives to “observe high standards of commercial honor and just and equitable principles of trade.”
Former and current customers of Fortune Financial Services’ Monaca, PA branch, who have experienced significant investment losses are encouraged to contact securities attorney Lawrence L. Klayman, Esq. at (888) 997-9956 or lklayman@klaymantoskes.com for a free and confidential consultation.
KlaymanToskes offers legal services on a contingency fee basis, meaning we do not collect attorney’s fees unless we are able to obtain a financial recovery for you. KlaymanToskes also has the experience and resources to prosecute your case. The firm has recovered over $250 million for investors in FINRA arbitration cases alone.
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $250 million in FINRA arbitrations and over $350 million in other securities litigation matters. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
Lawrence L. Klayman, Esq.
888-997-9956