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January 22, 2019 at 03:10 PM
Massachusetts Securities Regulator William Galvin charged Royal Alliance Associates on Tuesday with failing to supervise an unsuitable investment made by one of the firm’s agents, which cost two investors nearly $60,000.
The agent, Stephen F. Davis of Barrington, Rhode Island, has also been charged with breaching his fiduciary duty to his clients, Galvin’s office states.
According to the administrative complaint filed by the Massachusetts Securities Division, Davis took over the Royal Alliance account of two investors after their investment advisor retired, knowing “that the investors were inexperienced and would rely heavily upon his advice.”
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In 2015, Davis advised the couple to exchange an annuity product three years before its expiration for another product with a much lower interest rate.
“Many investors rely on their agent’s assistance in making investments that will best benefit them,” Galvin said. “Agents and firms have a duty to act in the best interest of their clients.”
Davis failed to file the correct paperwork for the exchange in a timely manner, which “led to the couple being charged more than $15,000 in penalties;” Davis, however, received more than $17,000 in commissions for the sale.
