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Regulation and Compliance > Federal Regulation > FINRA

FINRA Suspends Ex-AXA Rep Over Secret Settlement

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The Financial Industry Regulatory Authority sanctioned a former AXA Advisors representative for settling a customer complaint without the firm’s knowledge or approval, according to FINRA.

Without admitting or denying the regulator’s findings, Billy Hai Zhang signed a FINRA letter of acceptance, waiver and consent Feb. 27 in which he agreed to a 15-day suspension from associating with any FINRA member firm and a $5,000 fine. FINRA accepted the letter Tuesday.

Zhang is not currently registered as a broker or RIA, according to his profile on FINRA’s BrokerCheck website.

Zhang was “permitted to resign” from AXA, effective April 19, 2018, “while under investigation for sales practices and unauthorized funds withdrawal allegations made in a customer complaint,” according to BrokerCheck. On April 26, 2018, AXA filed a Form U5 terminating Zhang’s registration, FINRA said.

It was not clear Thursday whether the firm asked him to resign or if he offered to resign. Zhang and AXA parent firm Equity Holdings did not immediately respond to requests for comment.

Zhang first became registered with a FINRA member firm in August 2008 as an investment company products/variable contracts representative at AXA, according to FINRA.

Between December 2011 and March 2012, Zhang was registered with a different FINRA member firm (MetLife Securities), but he again registered with AXA in March 2012, as a general securities representative, FINRA said.

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.


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