The firm must hire an Independent Compliance Consultant to monitor its actions with variable annuities and the two units agreed to prohibit Michael P. Ryan, and chief compliance officer, Rose M. Rudden from all involvement in variable annuity marketing, sales, reviews, or approvals until the consultant reports to the SEC and the independent directors of G&C following a review of all new policies. Ryan is also president and CEO of the parent company, Gilman Ciocia.
In November, the SEC suspended for one year Christie A. Andersen, who was compliance officer at the Boca Raton, Fla.-branch office of PCS starting in 2002 and who became the office's supervisor in 2004. Anderson reviewed and supervised the sales until she left G+C in 2006 and became chief compliance officer of a broker-dealer. Under an Offer in Settlement, Andersen paid a $10,000 fine and was suspended from any supervisory capacity with any broker, dealer or investment advisor during the suspension.
Three Registered Representatives made millions of dollars in commissions in selling variable annuities while a fourth earned hundreds of thousands of dollars as a series of free-lunch seminars provided them with a steady stream of customers, according to the SEC's order, which pictures the abuses as occuring over several years. However, the SEC report honed in on the sale of $5 million in annuities to 23 clients.
The Florida Department of Financial Services revoked the license of one Registered Representative, Eric J. Brown, in 2003. However, another representative, Matthew J. Collins, signed the paperwork for annuities Brown solicited, misrepresenting who had made the sale. Brown operated in the Delray Beach and Boynton Beach, Fla., offices. It was not until 2005 that the firm required Brown's work to be reviewed before completion of the annuity sales.
The SEC also found that a supervisor complained repeatedly that Registered Representative Kevin Walsh, who worked in the Melbourne, Fla., branch office, failed to submit his variable annuity business to the supervisor for review in violation of procedures. Although the compliance officer at the time was involved in dealing with the complaints, as was Ryan as PCS president, no action was taken against Walsh who earned about $385,000 in sales commission in 2004 with PCS earning about the same amount.
Files of another Representative, Mark W. Wells, had inaccurate financial information about clients while the paperwork had the signatures of his assistants, not the customers who purchased the annuities.
The firms agreed to prohibit Wells and Collins from making sales of variable annuities to persons over the age of 59.5 pending the completion of the work of the independent consultant and the adoption of new procedures.
