An AWC was issued in which Christine Anne Warner (CRD #4001584) was fined $5,000 and suspended from association with any FINRA member in any principal capacity for 40 business days. Without admitting or denying the findings, Warner consented to the sanctions and to the entry of findings that she failed to reasonably supervise the sales practices of two registered representatives.
The findings stated that contrary to the firm’s WSPs, Christine Anne Warner failed to compare the information on a representative’s exchange applications with disclosed surrender charges with other sources of information such as the original applications, the surrender fee schedules, or the customers’ most recent account statements. As a result, Warner failed to detect that the representative had understated the customers’ actual surrender charges on nearly all of the exchange applications that she reviewed and approved. In total, these transactions caused customers to incur surrender charges totaling $227,584.13. Moreover, Warner failed to conduct an analysis to determine whether the cost savings of the new share class exceeded the amount of the surrender charges and thereby failed to reasonably determine whether the recommended exchanges were suitable.
In addition, Warner failed to reasonably investigate red flags of excessive variable annuity switching by one of the representatives. Warner was notified that a variable annuity issuer terminated their agency relationship with the representative because he had recommended the early liquidation of 23 variable annuity contracts, which resulted in the imposition of substantial surrender fees. Nonetheless, over the course of one year after receiving this notification, Christine Anne Warner approved new variable exchanges that the representative recommended to 11 of the same customers. These new exchanges also caused the customers to incur additional surrender fees.
The findings also stated that Christine Anne Warner failed to reasonably investigate red flags that another representative was conducting securities business through an unapproved email account. Warner was also assigned supervisory responsibilities for the representative when he was placed on heightened supervision. Notwithstanding Warner’s knowledge of the representative’s use of an outside email account, she did not take reasonable steps to review and ensure the retention of these business-related emails. Even after being advised by FINRA that the representative and office staff were continuing to use the outside email account to conduct securities business with firm customers, Warner made no reasonable effort to review or ensure the retention of these emails.
The suspension is in effect from January 3, 2023, through March 1, 2023.