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Regulator Slams Securities America, Advisor Over Alzheimer’s Ad

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Massachusetts securities regulators have charged Securities America with supervisory failure after one of its independent advisors aired “deceptive” radio ads that “exploited the dangers of Alzheimer’s disease in order to gain access to senior clients.”

Secretary of the Commonwealth William Galvin is seeking a cease and desist order and censure of the Ladenburg Thalmann-owned (LTS) independent broker-dealer and advisor Barry G. Armstrong related to the advertising and marketing efforts. The regulator, who announced the news early Wednesday, also wants to require the IBD to obtain an independent compliance consultant and for both Securities America and Armstrong to pay an administrative fine.   

According to Galvin’s office, Armstrong “ran a grossly deceptive AM radio advertising campaign targeted at vulnerable Massachusetts senior citizens.” The advisor hosts a regular radio show that airs on several AM radio stations and “wrote and voiced the ads.”

The radio ads, which aired in the summer of 2014, “implied that the agent is an individual with access to special medical and support information,” the Massachusett’s regulator’s office said in a statement. “He is neither.”

In fact, Armstrong “is a financial professional looking to grow his business with senior clients,” according to the state’s complaint.

FINRA records show that Armstrong, a 30-year industry veteran, has a history of legal and regulatory issues. Prior to Securities America, he was affiliated with New York Life Securities (1984-1986), 1717 Capital Management of Newark, Deleware (1986-2003), and Woodbury Financial Services of Needham (2004-2007).

The advisor’s ads urged listeners to call the Needham-based advisor for free information on Alzheimer’s, the regulator says. Armstrong’s staff then called the listeners and mailed them marketing materials “as well as a freely available fact sheet on Alzheimer’s published by the National Institute on Aging.”

For its part, Securities America says it “disagrees with the Masssachusetts Securities Division’s enforcement action and will vigorously defend against the allegations brought,” according to Janine Wertheim, senior vice presisdent and chief marketing officer.

Regulatory Run-Ins

Before becoming an advisor, Armstrong was charged with grand larceny for the theft (ironically) of a radio in Rye, New York. Some six months after the initial charges were made (in 1980), the matter was adjudicated and conditionally discharged.  

In 1998, Armstrong and a customer settled a dispute regarding a fixed life insurance policy that the client claimed was “unsuitable;” the client sought $600,000. The advisor agreed to cover $250,000 for the client’s legal fees, and the issuer of the insurance policy agreed to keep the policy in force until the death of the insured.

The advisor was let go by 1717 Capital Management in 2003 for violating company procedures apparently related to his radio work. “I disagreed with the allegations, had an approved disclaimer broadcast four times per show, and am currently disputing the allegations,” Armstrong stated in the FINRA records.  

In 2009, a client requested that Armstrong pay $50,000 in damages from misrepresentations and other wrongdoing. The client was granted $12,381 in damages. “I deny all charges …,” the advisor said in the FINRA records. “Client was provided with all the required disclosure documents and was a well-informed and knowledgeable investor. I have never personally met with this client … This claim was part of a global settlement by Securities America [of Jan. 18, 2012]. I was not asked to nor did I contribute to this settlement.”

In late 2012, a client withdrew a complaint regarding the performance of his account and a request for $15,000 to cover damages tied to losses.

“The client’s balance decreased modestly after the market suffered significant losses in early November. The advisor spoke with client, and the risk tolerance and current defensive portfolio composition continues to be appropriate for the client’s intermediate- and long-term goals,” Armstrong said in the FINRA records.

“The client did not intend to file a formal complaint and was simply voicing his dissatisfaction with the short-term loss which has since recovered,” the advisor added. “The client has withdrawn his complaint.”

— Check out Combating Elder Abuse Requires More Than Raising Awareness on ThinkAdvisor.


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