The State of Massachusetts fined SII, a broker-dealer, over $5 million both in restitution to clients and regulatory fines.[1]  The reason?  Ripping off people with expensive, inappropriate investments in non-traded REITs and annuities.

Here is one very tragic case study cited in the article:

“The Massachusetts Securities Division became aware of the violations when a 63-year-old nurse complained about the suitability of the products she was sold by SII in 2016. The nurse said she told SII agents she and her adult daughter had significant health issues and she anticipated needing immediate access to her funds. SII sold her three annuities with high surrender fees and lockup periods of five to 10 years, accounting for 72% of her net worth. She was then sold a non-traded REIT, which “far exceeded 10 percent of her liquid net worth,” the Massachusetts charges against SII stated.

When the nurse became unemployed and suffered from medical issues she had disclosed to SII agents, she was unable to access most of her funds without paying significant penalties.”[2]

Why would a broker engage in such rogue behavior with vulnerable people?  Based on the article, “Follow the money”[3] might come to mind.

Could these poor people have had a better outcome had they worked with a fiduciary advisor who should care more about their interests?

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[1] Tracey Longo, “Firm LPL Acquired Slapped With Fine for Unsuitable REITs”, Financial Advisor FA., September 7, 2018 on https://www.fa-mag.com/news/firm-lpl-acquired-slapped-with-fine-for-unsuitable-reits-40725.html?utm_source=FA+Subscribers&utm_campaign=d0b7357802-FAN_FA_News_PNC_Webcast_090718&utm_medium=email&utm_term=0_6bebc79291-d0b7357802-222638641  accessed on September 18, 2018.
[2] Idem.
[3] Quoted in the 1976 movie “All the President’s Men”.  See https://en.wikipedia.org/wiki/Follow_the_money  accessed on September 18, 2018.

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