WASHINGTON — A variable annuities distribution unit of Prudential Financial has been fined $950,000 for alleging failing to detect and prevent a scheme by a former registered sales assistant at a brokerage that resulted in the theft of approximately $1.3 million from an 89-year-old customer’s variable annuity account.
The enforcement action was undertaken by the U.S. Financial Industry Regulatory Authority (FINRA).
The case, from 2013, stems from actions by Travis A. Wetzel of LPL Financial in Frederick, Maryland.
Wetzel was indicted in 2014 in Federal District Court in Greenbelt, Maryland on wire fraud and money laundering charges, and pleaded guilty to money laundering in 2015. He was sentenced to 42 months in prison.
FINRA alleged in the enforcement action that Prudential Annuities “repeatedly failed” to adequately investigate “red flags” showing that Wetzel was transferring money from the customer’s Prudential variable annuity account to a third-party bank account in his wife’s maiden name. FINRA previously barred Wetzel in May 2013. Prudential Annuities and LPL reimbursed the customer in 2013, FINRA said.
In settling this matter, Prudential Annuities neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, said, “Firms must ensure that their supervisory systems and procedures are designed to recognize and follow up on red flags.”
Bennett said there were numerous red flags raised over the course of this scheme, and “Prudential Annuities Distributors’ failure to adequately respond to them allowed an unscrupulous actor to prey on an elderly customer.”