In a recent development, a customer dispute has been filed against Dorothy Welsch, a financial professional associated with Principal Securities, Inc. (CRD 1137). The client alleges that Welsch failed to properly allocate the subaccount investments in her variable annuity in November 2022, resulting in damages to the value of the account.
According to the disclosure on FINRA’s BrokerCheck (CRD #5661074), the customer dispute was denied on January 12, 2024. Principal Securities, Inc. investigated the client’s allegations and found them to be without merit. Welsch has been registered as a broker and investment advisor with Principal Securities, Inc. since May 10, 2016.
Haselkorn & Thibaut, a national investment fraud law firm with offices in Florida, New York, North Carolina, Arizona, and Texas, is currently investigating Dorothy Welsch and Principal Securities, Inc. regarding this matter. The firm encourages any clients who have suffered losses due to potential misconduct to contact them for a free consultation at 1-888-628-5590.
Understanding Variable Annuities and FINRA Rules
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Variable annuities are complex investment products that combine features of insurance and securities. They typically offer a range of subaccounts, each with its own investment strategy and risk profile. Financial professionals are responsible for properly allocating a client’s investments among these subaccounts based on the client’s risk tolerance, financial goals, and other factors.
FINRA Rule 2111, known as the “Suitability Rule,” requires that financial professionals have a reasonable basis to believe that a recommended transaction or investment strategy is suitable for the customer, based on the customer’s investment profile. This profile includes factors such as age, financial situation, investment objectives, and risk tolerance.
Additionally, FINRA Rule 2330 specifically addresses variable annuities, requiring that financial professionals and their firms ensure that the customer understands the unique features, risks, and costs associated with these products before recommending them.
According to a Forbes article, investment fraud and bad advice from financial advisors can have devastating consequences for investors. It’s essential for advisors to adhere to regulatory guidelines and prioritize their clients’ best interests to prevent such incidents.
The Importance for Investors
Proper allocation of subaccount investments in a variable annuity is crucial for investors, as it directly impacts the performance and risk exposure of their investment. When a financial professional fails to consider a client’s individual circumstances and risk tolerance, it can lead to significant losses.
Investors rely on the expertise and fiduciary duty of their financial advisors to make suitable recommendations and manage their investments responsibly. When an advisor breaches this trust, it can have severe consequences for an investor’s financial well-being and retirement plans.
This case serves as a reminder for investors to remain vigilant and regularly review their investment accounts. If an investor suspects that their financial advisor has acted improperly or caused losses due to misconduct, they should promptly seek legal counsel to protect their rights and explore potential avenues for recovery.
Recognizing Red Flags and Seeking Help
Investors should be aware of potential red flags that may indicate financial advisor malpractice, such as:
- Unexplained or inconsistent account performance
- Lack of communication or transparency from the advisor
- Recommendations that seem unsuitable or misaligned with the investor’s goals and risk tolerance
- Excessive trading or churning of the account
- Unauthorized transactions or account changes
If an investor suspects misconduct or has suffered losses due to their financial advisor’s actions, they may be able to recover damages through FINRA arbitration. This process allows investors to seek compensation for losses caused by securities fraud, negligence, or breach of fiduciary duty.
Haselkorn & Thibaut, with over 50 years of combined experience and a 98% success rate, has helped countless investors recover losses through FINRA arbitration. The firm operates on a contingency basis, meaning they charge no fees unless a recovery is obtained for the client.
Investors who believe they may have a claim against their financial advisor or brokerage firm are encouraged to contact Haselkorn & Thibaut at 1-888-628-5590 for a free, no-obligation consultation. The firm’s experienced attorneys can help investors understand their rights and guide them through the process of seeking recovery.
