FINRA Suspends Ex-AXA Rep Over Secret Settlement

In February 2017, Zhang settled a customer complaint without his firm’s knowledge or approval, according to the FINRA AWC letter. As a result, he violated FINRA Rule 2010 (governing standards of commercial honor and principles of trade), FINRA said.

FINRA started its investigation after receiving a FINRA Rule 4530 disclosure from AXA stating that Zhang had been “suspended based on sales allegations made by a client regarding their account,” according to the regulator.

In November 2016, Zhang received a written communication from one of his customers of the firm, in which the client complained about the use of proceeds from the partial redemption of a variable life insurance product. The proceeds, in the amount of $10,600, were used to reinstate a separate policy that had lapsed due to the nonpayment of premiums, according to FINRA.

Three months later, on Feb. 23, 2017, Zhang paid $10,600 to settle the customer’s complaint, the regulator said. Zhang then failed to notify the firm about the complaint or obtain its consent or approval before making the payment, FINRA said.

In a separate customer dispute that was still pending as of Thursday, clients alleged misrepresentation and unsuitability in connection with annuity and insurance policies sold by the rep in 2014 and 2015, according to FINRA. The customers also claimed many of the charges and fees by Zhang were not disclosed to them at the time of purchase and that he forged their signatures on many of the forms associated with those policies, FINRA said.

— Check out FINRA Bars Another Ex-Broker From Shuttered BD First Standard on ThinkAdvisor.