MML Investors Services LLC, a subsidiary of MassMutual, has agreed to pay a $250,000 fine to the Massachusetts Securities Division for failing to supervise a broker and registered investment advisor rep who defrauded clients by pressuring them into unsuitable high-commission insurance and annuities products “in order to line his own pockets,” Secretary of the Commonwealth William F. Galvin said in a statement released today.
As part of the consent order filed by the Massachusetts Securities Division, MML Investors Services agreed to pay the fine and disgorge any profits related to the unlawful actions of the agent, and to conduct an internal review of its supervisory procedures.
“We take compliance with securities laws very seriously and cooperated fully with the inquiry. We are pleased to have resolved this matter,” MassMutual Spokeswoman Paula Tremblay told Financial Advisor magazine.
The Securities Division also filed a separate complaint against the rep Charles J. Evan, seeking to permanently ban him from operating in Massachusetts.
Evan is alleged to have “aggressively pushed clients into variable annuities, while falsely claiming not to be receiving commissions for the sale of those products,” the Massachusetts Securities Division said in a statement.
“Evan perpetrated a deceptively simple scheme for almost 10 years by subjecting his clients to high-pressure boiler room sales tactics and outright fraudulent misstatements, misrepresentations, and omissions while advising those clients to purchase high commission products intended solely to generate large profits for himself,” the complaint against Evan stated
In his drive for higher commissions, Evan “advised clients to liquidate assets from their retirement accounts in order to fund additional, unnecessary life insurance policy purchases as investment vehicles. In some cases, clients fell behind on payments and were still pressured by Evan to contribute additional funds to keep the policies in place,” according to the complaint.
“Evan repeatedly urged clients to act quickly on purchases by misrepresenting that the products he offered were the result of special deals that were only available for a short time, often telling clients that they had as little as 24 hours to decide whether to invest,” the complaint stated.
Evan, who was registered in the securities industry for 41 years and has 14 customer complaints and incidents on his BrokerCheck record, was terminated by MML in 2019 and permanently barred by Finra in 2020.
According to Evan’s BrokerCheck record, “without admitting or denying the findings, Evan consented to the sanction and to the entry of findings that he refused to provide documents and information requested by FINRA, when it began investigating Evan after his member firm filed a Form U5 reporting his termination in connection with allegations concerning inappropriate traditional insurance sales practices.”
Evan could not be reached for comment.
Evan was previously registered as a broker-dealer agent with Baystate Financial, as well as an investment advisor rep with Baystate Wealth Management and his own company, Capital Planning Group of Massachusetts.
In addition to a permanent ban from operating in Massachusetts, the Securities Division is also seeking an order to require Evan to pay a fine and restitution to harmed investors.