The Financial Industry Regulatory Authority (FINRA) announced on July 19
that they have fined Prudential Annuities Distributors, Inc. $950,000
for failing to detect or prevent about $1.3 million from being stolen
from the variable annuity account of an 89-year-old customer. According
to FINRA, the firm neglected to properly investigate “red flags”
raised indicating that former LPL Financial sales assistant and now convicted
felon Travis A. Wetzel was transferring the Prudential customer’s
funds from their variable annuity account to a separate bank account registered
in his wife’s maiden name.
FINRA’s Executive Vice President and Chief of Enforcement Brad Bennett
released a statement, saying, “Firms must ensure that their supervisory
systems and procedures are designed to recognize and follow up on red
flags. 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.”
During FINRA’s investigation, they discovered that Wetzel submitted
114 forged annuity withdrawal requests to Prudential between July of 2010
and September of 2012, when his misappropriation was finally discovered.
Despite the warning signs, Prudential consistently followed Wetzel’s
instructions. FINRA also discovered that Prudential’s inadequate
controls and supervisory procedures contributed to their failure to prevent
or even detect Wetzel’s activities.
Prudential Annuities Distributors neither admitted nor denied the charges
in settling the matter, but consented to the entry of FINRA’s findings.