Maine announces brokerage settlement

State securities regulators in Maine, Vermont, New Hampshire and Missouri have settled with Bankers Life and Casualty Co. over charges of unlicensed/unregistered brokerage activity by the insurance company.

According to the Maine Office of Securities, the settlement was for $9.9 million, to be disbursed among the states. Maine’s Securities Administrator Judith M. Shaw said today in a release that her office spearheaded the joint investigation into the unlicensed securities activity of Bankers Life.

Bankers Life also agreed to pay $375,000 to reimburse the task force states for investigation expenses, $260,000 in past licensing and registration fees, and $106,000 to cover the cost of state audits to ensure compliance with the consent order.  Maine is expected to receive approximately $770,000 in penalties, fees and expense reimbursement in connection with the settlement.

“When the possible unlicensed activity was discovered through a branch audit by Maine’s Office of Securities, the task force that was assembled conducted a thorough and aggressive investigation of Banker’s Life’s practices nationally,” Shaw said in the release. “This settlement will protect Maine investors from the dangers of unlicensed securities activity and increase confidence in the securities industry.”

Shaw said the investigation was prompted by a single complaint from an 82-year old investor regarding the sale of an annuity product.

“All investors, whether businesses or individuals, should never hesitate to contact the office with questions, concerns or complaints,” she added.

From the release:

Investigators found that Bankers Life engaged in unlicensed activity in Maine and other states by affiliating with licensed securities brokers UVEST Financial Inc. and ProEquities, Inc., and by directing the operations, training, and sales techniques used by those firms—including having agents use a “sales script” to market certain products, and by steering investors to Bankers Life annuity products.  The investigation also found that Bankers Life received approximately $21 million from its two affiliated brokerage firms for variable annuity and securities transactions and investment advice from 2005-2011.

 In addition to the settlement penalties and costs, the Chicago-based insurance company agreed that it, along with its Illinois-registered brokerage subsidiary, BLC Financial Services, Inc. (BLCFS), will not engage in the hiring, training, or supervision of any registered representatives or investment advisor representatives through March 31, 2015.