A recent case of a state insurance official getting sacked after recommending the barring of a broker highlights how various regulators and arbitrators can come to quite different conclusions about broker conduct.
Lawrence Mieras Jr., a broker with 36 years of experience who’s been registered with American Portfolios Financial Services since 2001, received $500,000 in 2017 from a deceased client, Addie Belle Jones, paid out directly by two annuities outside the probate process, the Wall Street Journal writes. The bequest, allegedly made in 2014 and modified to allow Mieras to get the money outside the estate process a few months before Jones died, caught the attention of Michael Stefanowitz, an insurance investigator with the Maryland Insurance Administration, after lawyers for Jones’ estate filed a complaint with the state regulator, according to the paper.
Stefanowitz said in his report that Jones was an unsophisticated investor, the Journal writes. She amassed $2 million in assets by early 2016, but most of it was from her parents, according to the paper. She lived in a nursing home, and her doctor said she tested positive for vascular dementia, according records produced in a court case filed on behalf of the estate, the Journal writes.
“It is highly doubtful on May 4, 2016, that Addie Belle Jones was competent to understand what Mr. Mieras was explaining or reading to her or asking her to sign,” her doctor wrote in an October 2018 affidavit submitted to federal court, according to the paper.
American Portfolios, meanwhile, wasn’t even qualified to do business in Maryland for more than three years before and after Jones’ death because it failed to file required annual reports, according to the Journal, which cites state records.
A Finra arbitration panel, after hearing a complaint filed on behalf of Jones’ estate, concluded in April 2018 that Mieras’ conduct “was not consistent with just and equitable principles of trade,” according to the paper. The panel also concluded that American Portfolios was deficient in its supervision of Mieras, according to an arbitration award cited by the Journal.
Nonetheless, the panel didn’t rule against the firm nor Mieras, saying that the issues “are regulatory issues not for the panel,” according to the paper. Furthermore, the panel said that the estate question was beyond its scope of authority and had to be handled in state court, according to the Journal. And Finra’s enforcement arm never brought actions against either Mieras or American Portfolios, the paper writes.
In June 2018, the Maryland Insurance Administration overruled Stefanowitz and wrote to lawyers for Jones’ estate that it was closing its investigation as it found no violations, according to the Journal. It then fired Stefanowitz, the paper writes, citing employment records. Stefanowitz tells the Journal that one official in the administration told him he was fired because the regulator’s enforcement division was “going in a different direction.”
Mieras allegedly got to keep the $500,000 and continues doing business in Maryland, the paper writes. Mieras’s lawyer tells the paper that American Portfolios’ investigation concluded that the bequest was appropriate and that Mieras should receive the bequest.
Mieras, through his lawyer, declined comment to the Journal, as did American Portfolios and the Maryland Insurance Administration.
Commissioner Alfred Redmer Jr., who oversees the administration, declined to go into details of the case, according to the paper.
“The decisions regarding producers are made by the career, subject-matter experts that we have in our agency. The bar is, did a producer violate the law or regulation. There are some actions that a producer will take that we may personally view as inappropriate, but if it does not violate the law there is no action we can take,” Redmer tells the Journal.
“Like every other state agency in every other state, we never, ever comment on personnel decisions,” he also tells the paper.
And a Finra spokeswoman tells the Journal that the industry’s self-regulator doesn’t comment "on enforcement actions or inactions.”