The seriousness of allegations against financial advisors should never be underestimated. The case in question involves a customer dispute lodged on 9/18/2023, alleging that the registered representative, Zvi Rosenzweig, of MML Investors Services, LLC, advised the complainant to partially redeem his variable annuity to fund a whole life policy. The complainant asserts that this advice was misrepresented, leading to significant tax implications. The client also maintains that he had available cash elsewhere and should not have been advised to redeem the variable annuity. The estimated loss is pegged at $350,000. This case is currently pending with the internal case number #202309180122N10NN.
Understanding the Allegation and the FINRA Rule
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For those unfamiliar with financial jargon, the allegation essentially implies that the advisor, Zvi Rosenzweig, gave advice that was not in the best interest of the client. He suggested the partial redemption of a variable annuity, which is a contract with an insurance company for a periodic payment, to fund a whole life policy, a type of permanent life insurance. This advice, according to the client, was misrepresented, leading to considerable tax liabilities.
According to the Financial Industry Regulatory Authority (FINRA) Rule 2111, brokers are required to have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer. This rule, also known as the “Suitability Rule,” is based on the customer’s investment profile, including the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information disclosed by the customer.
Why it Matters for Investors
Investors trust financial advisors to provide advice that is in their best interest. When this trust is breached, as alleged in this case, it can lead to significant financial losses. It’s crucial for investors to understand the implications of the advice they receive and the potential consequences of following such advice.
Furthermore, this case underlines the importance of the FINRA Suitability Rule. It serves as a reminder that advisors are obligated to provide suitable advice based on the investor’s profile. Failure to do so can lead to serious consequences for the advisor and the firm they represent.
Red Flags for Financial Advisor Malpractice and Recovery of Losses
Investors should be vigilant for signs of financial advisor malpractice. These can include frequent buying and selling of securities (churning), unsuitable investment recommendations, misrepresentations, and failure to disclose important information.
When such malpractice is suspected, investors can seek to recover their losses through FINRA Arbitration. This is a quicker and more cost-effective method than traditional litigation. Haselkorn & Thibaut, a national investment fraud law firm with offices in Florida, New York, North Carolina, Arizona, and Texas, specializes in helping investors recover losses through FINRA Arbitration. With over 50 years of experience and an impressive 98% success rate, they offer a “No Recovery, No Fee” policy and free consultations. Investors can reach them at their toll-free consultation number, 1-800-856-3352.
Currently, Haselkorn & Thibaut is investigating the allegations against Zvi Rosenzweig and MML Investors Services, LLC. If you have been affected by this case or similar circumstances, do not hesitate to reach out for assistance.
