- August 3, 2018
- Halloway & Associates
The Wolper Law Firm is currently investigating claims against Frederick Halloway, a self-employed Financial Advisor at Halloway & Associates in Easton, Maryland. Frederick Halloway has been in the securities industry since the 1970s and previously worked with Royal Alliance Associates.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on April 2, 2018, FINRA commenced a regulatory investigation against Frederick Halloway, “alleging that as the sole registered representative and owner of his member firm, he recommended that customers exchange one deferred variable annuity contract (VA) for another without having a reasonable basis for the recommendations.” Specifically, it is alleged that Frederick Halloway induced customers to sell one annuity and purchase another by touting the bonus features that could be earned by the investor by transacting the annuity exchange. Frederick Halloway allegedly failed to adequately conduct due diligence to first determine whether the bonus features offered the customer any real benefit.
A variable annuity is complex hybrid financial and insurance product that offers investors a stream of income, tax deferment and a death benefit. The sub-accounts of an annuity are generally invested in mutual funds, the selection of which will dictate the potential performance of the annuity. While there are benefits of variable annuities, they are often outweighed by the risks and other features.
For example, variable annuities may include high annual management fees, surrender charges, lock-up periods, and mortality charges. In addition, it is commonly misunderstood that variable annuities offer guaranteed investment returns. They do not. Many financial advisors fail to disclose that investment returns may be impacted by market conditions.
Many financial advisors recommend annuities because they generate high sales commissions relative to other financial products. Unscrupulous financial advisors may also engage in annuity “switching,” which refers to the practice of selling one annuity and purchasing another. Often times the “switch” is justified by the financial advisor by suggesting that the annuity purchased has superior features when any such enhanced feature is actually outweighed by the cost of the “switch.”
The Securities Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) have cautioned customers to be aware of “bonus credits” offered to financial advisors for selling certain variable annuity products
Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. In addition, Financial Advisors must first obtain authorization from their customers before placing trades in a customer account. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.
If you or someone you know was a customer of Frederick Halloway or Halloway & Associates, and you experienced investment losses, please contact the Wolper Law Firm at 800.931.8452 to discuss your specific situation and the legal options available. The Wolper Law Firm represents investors nationwide in securities litigation and arbitration.
Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. Simply put, he knows how the other side evaluates cases, which gives you a competitive advantage.