JHFN Hall of Famer at Center of Settlement Over Alleged Sales of Unsuitable Insurance Policies and Annuities

Back in June of this year, Moniz consented, without admitting or denying the allegations made against him by FINRA, to a six-month suspension from associating with any FINRA member firm in any capacity and a $25,000 fine in resolution of FINRA Disciplinary Proceeding No. 2013036095001. That suspension is scheduled to end in December.

FINRA alleged that Moniz, while employed by Signator Investors, Inc., made unsuitable recommendations to a married couple that they purchase a Variable Universal Life (VUL) insurance policy on the husband’s life, and use the proceeds of a reverse mortgage to purchase a variable annuity and open a managed investment account. It was further alleged that when questioned about the VUL application by the insurance company Moniz resubmitted the form and made additions and changes without first informing the clients. According to FINRA’s allegations, Moniz’s conduct amounted to violations of FINRA Rule 2010 and NASD Conduct Rules 2310 and 2110.

FINRA Rule 2010 states: “A member, in the conduct of his business, shall observe high standards of commercial honor and just and equitable principles of trade.” The rule was adopted verbatim from its predecessor, NASD Rule 2110. Rule 2310, NASD’s Suitability rule, requires firms to make reasonable efforts to obtain certain information from the customer, and to have a reasonable grounds for believing that a recommendation is suitable for a customer based on the customer’s financial situation and needs.

According to a Sept. 26 article in the Boston Globe, Moniz, who worked as a broker for John Hancock for 35 years, denied wrongdoing. He said consumers were aware of the fees and the investments helped them pay for elderly care and protect their nest eggs.

“Those that we did were completely appropriate,” Moniz said. “We preserved assets, and we provided care and income.”

The Attorney General’s statement on the case said, “consumers should be aware that using funds from a reverse mortgage to invest in financial products like annuities is always risky. Variable life insurance policies and variable annuities may not be appropriate investments for older individuals because of steep surrender and withdrawal penalties. Before purchasing any financial product, consumers should always ask questions and make sure that they understand the investment risks, read any forms that they sign, and never sign blank forms.”

As part of the settlement, John Hancock will also provide personnel with additional training designed to prevent and detect this type of misconduct.