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Finra Bars Broker Who Allegedly Engaged in Annuity Switches

By Alex Padalka April 17, 2019

Finra has barred a broker it says improperly recommended variable annuity exchanges, although the bar is for failing to provide requested information and cheating on a continuing education course, the industry’s self-regulator says.

Frederick Holloway allegedly sold investments through his firm Holloway & Associates, Inc., in Easton, Md., although he was the only registered representative with the firm since its founding in 1982, according to a disciplinary proceeding document published by the regulator.

Holloway did have a secretary, however, who resigned in 2009 and was replaced by Holloway’s then-client and friend whom Finra identifies only as “NL” and calls “Jane” for the sake of the decision. Jane allegedly became “troubled” by how Holloway switched his clients between variable annuities to generate commissions and reported him to Finra’s enforcement arm, the regulator says. Holloway allegedly earned $214,989 in commissions on 42 separate switch transactions, which cost his clients a total of $114,470 in surrender fees, according to the disciplinary proceeding document.

During the course of Finra’s investigation, Holloway also admitted to completing pre-signed annuity exchange documents and having Jane complete his required state insurance online continuing education course for him, the regulator says. Jane informed the regulator that Holloway also improperly withheld documents during the regulator’s investigation, according to the disciplinary proceeding document. In addition, Jane alleges that Holloway had her impersonate clients, according to Finra. The regulator also alleges that Holloway overstated the scope of his advisory business on his Form ADV.

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Finra opted not to impose any sanctions for Holloway’s alleged and admitted violations aside from his failure to comply with the requests for documents and information and for cheating on the courses, according to the disciplinary proceeding document.