• April 29, 2019
• Sterne Agee Financial Services

On April 29, 2019, the Wolper Law Firm, P.A., P.A. filed an arbitration claim against Sterne Agee Financial Services (“Sterne Agee”) and Financial Advisor, Richard Wesselt, before the Financial Industry Regulatory Authority (FINRA).  The arbitration relates to alleged sales practice misconduct committed by former Sterne Agee Financial Advisor, Richard Wesselt, who was located in the Jeffersonville, Pennsylvania branch office.  The Statement of Claim, filed on behalf of five former customers of Sterne Agee and Richard Wesselt, seeks damages of between $5 million and $10 million and relates to insurance churning and the rendering of unsuitable investment advice.

The Statement of Claim alleges:

“This is a classic case about a Financial Advisor putting his interests ahead of his clients.  Financial Advisor, Richard Wesselt, aggressively recommended that Claimants purchase whole-life insurance products issued by Ohio National Life Insurance and fund those policies by taking loans against the cash value of existing policies and withdrawing money from annuities and 401(k) retirement savings plans.  These recommendations were presented and “pitched” to Claimants as an investment and financial planning strategy that the “ultra-rich” people were using.  To this end, Mr. Wesselt made clear that he was not selling life insurance but rather an investment strategy that would provide Claimants with the opportunity to achieve financial security for themselves during their lifetime. 

In total, Mr. Wesselt recommended that Claimants, purchase a staggering twenty-four (24) life insurance policies (including 22 whole-life policies), with an aggregate death benefit of more than $27 million. Mr. Wesselt also recommended unsuitable annuity products.  The annual premium payments were approximately $200,000 and, to date, the Claimants have spent more than $2 million to fund these grossly unsuitable policies represented to them as investments.  In order to fund premium payments, Mr. Wesselt encumbered the policies with loans of more than $1.2 million, which has eroded any benefit of having permanent insurance.  This strategy virtually guarantees that the whole-life policies will never become self-sustaining.”

Richard Wesselt described the disputed investment strategy as a means to achieve “infinite banking,” a controversial investment strategy involving the use of whole-life insurance products for investment and retirement purposes. The allure of infinite banking was illusory. The policies became so encumbered by loans that they are unsustainable and have begun to lapse, resulting in a complete waste of premium and loss of insurance.

Richard Wesselt is no longer registered with Sterne Agee and is currently the subject of fourteen (14) customer complaints, alleging sales practice allegations.

Financial Advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. 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. 

The Wolper Law Firm, P.A. represents investors nationwide in securities litigation and arbitration on a contingency fee basis.  Matt Wolper, the Managing Principal of the Wolper Law Firm, P.A., 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.  We can be reached at 800.931.8452 or by email at mwolper@wolperlawfirm.com.