Fix and Variable Annuity Unsuitable and Unnecessary Switch (Exchange) FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

September, 2011:

Charles William Kromer Jr. (CRD #1068867, Registered Rep., Cincinnati, Ohio)


submitted an Offer of Settlement in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the allegations, Kromer consented to the described sanction and to the entry of findings that he engaged in unsuitable variable annuity switches for customers. The findings stated that the transactions were unsuitable because of the costs incurred, including substantial surrender charges, higher administrative fees and costs of additional riders, along with other disadvantages of a new variable annuity, including longer surrender periods, higher initial surrender fees and higher threshold for withdrawing funds without penalty. The findings also stated that Kromer did not take into account his customers’ ages, incomes and investment strategies. The findings also included that in connection with the unsuitable variable annuity purchases, Kromer made misstatements and omissions of material facts to customers to induce them to switch variable annuities through improperly completing sales data sheet and explanation of investment forms, which customers reviewed and signed, and by failing to explain why switching variable annuities was more advantageous than continuing to hold the variable annuities the customers already owned. FINRA found that on the application forms, Kromer falsely indicated the customer’s objectives and labeled the transactions as unsolicited when they were not. FINRA also found that Kromer engaged in the unsuitable switches so that he could continue to receive compensation for variable annuity contracts customers held after he moved his registration to another member firm. (FINRA Case #2005002244102).